Markets end in green despite grim global cues

Indian equities markets Tuesday bucked an all-round global trend of a sea of red to end in the
green despite grim global cues, surprising analysts.

The market opened very weak but after C.B. Bhave, chairman of the Indian market regulator
Securities and Exchange Board of India (SEBI), assured investors in a hurriedly called press
conference in capital New Delhi, markets appeared to recover and finished in the green.

The 30-share-sensitive index plunged by 442.20 points soon after opening to a near two-year low of
12,153.33 - a loss of 3.5 percent - amid heavy selling in stocks of banking, metal, realty and IT
sectors.

By close of trading, however, the Sensex had recovered sufficiently to end at 12,860.43, up 264.68
points or 2.10 percent from its previous close Monday at 12,595.75.

The broader-based 50 share S and amp;P CNX NIFTY also showed a similar trend and closed at
3,938.75, up 88.7 points or 2.30 percent from its previous close Monday at 3,850.05.

With the US House of Representatives rejecting the $700 billion bailout plan Monday, markets all
over the world crashed. The Dow Jones Industrial Average tracking the New York Stock Exchange
dropped Monday by 777.68 points or 7 percent, its largest point-drop in history.

Markets in Europe too crashed Monday while those in Asia did so on Tuesday. Only the Indian
market bucked the trend and behaved in a surprising manner, analysts said.

Analysts, however, remained sceptical about the impact that Bhave's and later Finance Minister P.
Chidambaram's attempts to talk up markets had in propping up equities prices.

"The situation is extremely grim and there is absolutely no liquidity in the market with nobody lending
to nobody in the inter-bank market," said Jagannadham Thunuguntla, head of the capital markets
arm of India's fourth largest share brokerage firm, the Delhi-based SMC Group.

"For example, the London Interbank Offered Rate shot up to an all-time high of 6.33 percent
Tuesday, an intra-day jump of nearly 4.5 percent which is just too high to imagine," he said.

"There is no liquidity in the Indian system as well, so the only way you can explain the rise in the
Indian markets is that there was short covering by short sellers," he said.

"It is extremely surprising that the India markets gained despite the gravity of the situation," he said.

Even Tuesday, one more European bank was bailed out when the Belgian, French and Luxemburg
governments pumped in 6.4 billion euros or $9.2 billion into Dexia, the top player in Belgium and
Luxemburg.

It also had incurred huge losses on its Lehman Bros exposure.

Portfolio strategist and US-trained chartered financial analyst Manoj Krishnan of Delhi-based Price
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Investment Management and amp; Research Services also felt that short sellers had pushed down
prices over Monday and Friday and then booked profits Tuesday.

"It was manipulated speculation," he felt adding "Over the last two days foreign institutional sales
were just around Rs.10 billion and that is not enough to send down the Sensex by about 1,000
points."

"There were other big players selling and it must have been short sales who seemed to have prior
information about events," he said.

However, Bhave's bid to talk up the market Tuesday morning with news that Finance Minister
Chidambaram had met him earlier in the day to assess the market situation, seemed to calm nerves
and investor's returned to their buying ways.

Later, another reassuring statement from Finance Minister Chidambaram saw markets continue to
recover and despite some profit booking at the higher levels closed in the green.

The BSE mid-cap index finished at 4,798.29, up 68.96 points or 1.46 percent against its previous
close Monday.

The BSE small cap index too recovered in the final stages after being in the red most of the day to
end at 5,577.47, up 24.44 points or 0.44 percent from its previous close Monday.

Bank, capital goods, realty and technology, entertainment and telecommunication stocks were the
major gainers. Metal, fast moving consumer goods, health care and information technology stocks
led the declines.

ICICI Bank gained the most at Rs.534.85, up Rs.41.55 or 8.42 percent from Rs.493.30. TCS at
Rs.662.75, gained Rs.43.10 or 6.96 percent from Rs.619.65.

HDFC Ltd at Rs.2,141.15 went up Rs.108.40 or 5.33 percent to Rs.2,032.75. Bharti Airtel at
Rs.785.05, gained Rs.38.40 or 5.14 percent to Rs.746.65.

Among losers Tata Steel shed the most, losing Rs.19.75 to Rs.425.60, down from Rs.445.35.

Tata Motors at Rs.344.20 lost Rs.11.65 or 3.27 percent from Rs.355.85, Ranbaxy Laboratories at
Rs.247.75 lost Rs.8.10 or 3.17 percent from Rs.255.85 and Grasim shed Rs.44.70 or 2.58 percent
to Rs.1,687.60 from Rs.1,732.30.

Reflecting the short covering trend and the underlying nervousness in the market despite the
Sensex finishing in the green was the fact that fewer stocks advanced compared to declines.

Advances were 1,277 or 47.79 percent compared to declines of 1,316 or 49.25 percent while 79
remained unchanged.

Analysts said, given the grim liquidity situation the world over, the Tuesday rally is unlikely to be
sustained in the coming days until the US bailout plan is put in place.

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( © IANS / India eNews)

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