After Monday mayhem Sensex rebounds, reverses, ends flat

Surrendering gains of more than 2 per cent in choppy trade, Dalal Street closed with a 0.16 per cent rise today as investors reeling from sharp losses cut their bets ahead of a US Federal Reserve meeting. The BSE Sensex closed up 23.97 points to 14,833.46, unable to claw back Monday’s 6 per cent plunge. The index fell as much as 0.9 per cent, before rebounding to be up as much as 2.4 per cent.

The BSE Sensex is down about 27 per cent this year, making it one of the worst performers in Asia. It is about 30 per cent below its record high of 21,206.77 hit on January 10. Investors had priced in a 100 basis point cut in interest rates by Fed to shield the world’s largest economy from further damage from the growing financial crisis, which has hit sentiment around the globe. JM Financial Services said in a report that the market had fallen to a level where the risk-reward was in favour of investing, recommending investors to “go long” through mutual funds. “Overall, the move on Monday can be described as a selling climax, which now means that a bullish reversal is likely,” it said.

State Bank of India (SBI) fell 2.5 per cent to a five-month closing low of Rs 1,592.20, just above the Rs 1,590 price of a $4.1 billion rights issue that closed on Tuesday. Reliance Industries fell 1.6 per cent to Rs 2,145.35, reversing gains of nearly 2 per cent earlier. The stock is down 25.5 per cent this year.