Money on the markets

A maturing market amid the mayhem

Sensex ends flat in choppy trade

March 27, 2009

The Sensex jumped nearly 50 points on Friday to end at 10,048.49, driven mostly by increasing optimism worldwide.

Gains however were capped by profit-booking in a market that has recovered considerable ground after Satyam unveiled the country’s biggest corporate fraud in early January.

The rally was led mostly by metals (index up 4.8 percent), health care (index up 2.8 percent), banking (index up 2.6 percent) and auto stocks (index up 2.2 percent).

Banking shares gained on improved global economic outlook and expectations of further monetary easing by the government. MARKETS-SOUTHASIA-STOCKS/

The government has set a record gross borrowing target of 3.62 trillion rupees ($71 billion) for the year to March 2010. But increased borrowing is likely to impact interest rates as an increase in demand will edge interest rates higher.

Heavy selling was seen in index heavyweights Reliance Industries and Infosys Technologies.

The top gainers included Tata Steel (up 9.1 percent), Tata Motors (up 9.3 percent), Reliance Communication (up 8.9 percent) and Hindalco (up 5.2 percent).

The metals sector saw good activity, with JSW Steel (up 13.7 percent), Sesa Goa (up 9.8 percent) and Tata Steel (up 9.1 percent) sending the BSE Power Index higher by over 4.8 percent.

Renewed FII interest in Indian shares has boosted confidence. Data shows FIIs bought almost $620 million worth of shares by mid-March on hopes of a recovery in the global economy.

The 50-share NSE index ended 0.86 percent up at 3,108.65, after touching the day’s high of 3,123.35.

Asian markets saw a mixed response from investors. Britain’s economy slowed more than expected, shrinking by 1.6 percent in the fourth quarter – its sharpest decline since 1980. Global recession has clouded Japan as it slipped to the brink of deflation and inflation in Europe hit close to zero.

Investor sentiment is likely to see some buoyancy with the Sensex closing above the 10,000 mark for two days in a row. But is the feel good factor in the market strong enough to keep the Sensex in five digits when the last quarter earnings season kicks off in April?

Comments

The party is not over with sensex.The good times are continuing.

Sensex has climbed 1,082 points(12.06%)over the week.It has risen 1,882 points(23.13%)since 9 March.Sensex is just 287 points(2.85%) below 2009 high of 10,335 points(Satyam saga).

A debate is on on what has caused this rally.Is it a bear rally?Is economy showing signs of a turn around?

There are reasons to believe that economy may have hit the bottom.There is a significant improvement in primary bookings in housing sector, and besides offtake in cement,steel,copper,auto sales have shown a growth.

But Yojana Bhavan chief on Friday told CII that GDP growth in 2008-2009 will fall to 6.5%.There was nothing unexpected about this statement.He went on to say that year 2009-2010 would be significantly worse off.That again was unexpected.If economy has hit its bottom,we should have heard planners say encouraging things unless this was a political statement on eve of elections.But Yojana Bhavan has had some distinguished planners of stature of V.T.Krishnamachari,Gadgil,Lakdawala and Manmohan Singh.Their assessment is a gospel truth.

The strength of sensex will now depend on mood of hedge funds.If they continue to play intra-day then this rally could be short-lived.They need to be a long term investors.

April – May months hold answers to our various matters of predictions.Adding to that, would be another prediction about strength of monsoons:First el nano effect then el nino effect!

Sensex has had a good run so investors do not mind a healthy correction.

Posted by A.Kapoor | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •