Asia effect: Sensex rises 360 points

The 30-share BSE index surged 1.89 per cent on Friday, led by ICICI Bank and Reliance Industries...

The 30-share BSE index surged 1.89 per cent on Friday, led by ICICI Bank and Reliance Industries, but concerns remained that the market lacked the foreign demand needed to revisit record highs. The gains were underpinned by a rally in Asian markets after comments by US Federal Reserve chairman Ben Bernanke raised hopes of further cuts in US interest rates.

Shares in second-largest lender ICICI Bank rose 1.9 per cent to Rs 1,184.65, its highest closing level in almost two weeks, on hopes of interest rates cuts after the growth data showed a slowdown in industrial output, traders said. Sensex ended up 359.93 points at 19,363.19, with 26 components gaining. It had risen as much as 2.2 per cent during the day.

“Today being the first day after the normal rollover of derivatives contracts, there was some genuine buying interest from retail investors,” said Nipun Mehta, chief executive of Unitis Tower Wealth Advisors. “But I really don’t think the worst is over yet.”

The market gained 2.7 per cent on the week but fell 2.4 per cent in November. Analysts expect it to remain choppy below a record high of 20,238.16 hit on October 30 due to caution after foreigners turned sellers of stocks in November. Foreigners have been net sellers of almost $1.3 billion of shares this month, a turnaround from buying of more than $7 billion between mid-September and end-October that drove the market to a series of record highs.

“Till the foreign funds become net buyers, we can’t expect a sustained rally,” said Viral Doshi, an independent strategist. The Sensex has risen 40.4 per cent so far this year, but is 4.3 per cent below its record high.