Sensex rallies by 117 pts on FIIs’ strength

Bulls came out of their slumber after two days on Monday. Stock markets recovered Friday’s losses as buying by foreign funds and others...

Bulls came out of their slumber after two days on Monday. Stock markets recovered Friday’s losses as buying by foreign funds and others resumed on hopes of strong quarterly performances from the corporate sector.

In an extremely volatile trading session, the benchmark index moved in an intra-day range of 206 points — the index was down by 75 points during early trades — and eventually ended with a solid gain of 117.91 points, or 1.98%, at 6,064.10, snapping its two-session losing streak.

The NSE S&P CNX Nifty index also ended with a gain of 34.70 points at 1,935.35. Sensex touched a low of 5,870.99 and a high of 6,076.97 during intra-day trades. It had lost 241.92 points in the previous two sessions.

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At the day’s low of 5,870.99, Sensex lost 380 points from the recent high of 6,249.60 touched on January 9, 2004. Sensex opened higher at 5,967.75 on Monday morning, but slipped soon after. Bargain hunting emerged after the Sensex touched the intra-day low of 5,870.99.

Aggressive bargain hunting by foreign institutional investors (FIIs) at lower levels reversed the prevailing weak trend. Monday’s early weakness was attributed to the recent slowdown in the foreign funds inflows. On Thursday (January 15), FIIs pulled out Rs 57.50 crore after putting in Rs 20.90 crore on Wednesday, and pulling out Rs 41.50 crore on Tuesday. Gains were recorded almost across-the-board. Old economy —automobile, commodities, power and cement —pivotals gained ground on renewed buying after early weakness.

“The market has appreciated a lot and at the current levels there are both kinds of opinions (buy and sell), which in line has increased volatility in the market. However, the undertone continuous to remain bullish. So despite the volatility, the bias is towards upward trend,” said a broker.

Said Hitesh Sheth, technical analyst, Prabhudas Lilladher Securities: “Substantial buying was witnessed in heavyweight stocks at lower levels. Huge selling on Thursday and Friday had damaged the trend. Though market witnessed a sharp pull back rally on Monday, the market has not recovered technically. If sustained buying doesn’t come from hereon, the market might come down.”

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Heavyweights State Bank of India, ITC, Hindustan Lever and Reliance Industries also contributed to the gains of the Sensex. Tech and pharma stocks also ended higher on fresh buying. Mid-cap side counters, however, displayed mixed trends.

Private sector banking major ICICI Bank (up 6.30% to Rs 301.25) firmed up—rising from an intra-day low of Rs 283.15—on renewed buying. Zee Telefilms rose from an intra-day low of Rs 154 to Rs 165 before settling at Rs 164.15, up 5.19% over its previous close. Tata Motors (up 4.42% to Rs 509.45) rose from an intra-day low of Rs 485 as buying resumed on the counter on hopes of bumper quarterly results on the back of strong festive-season sales.