Bulls back in action, Sensex up 344 pts

With metal prices and other global markets making a recovery, bulls charged back into action on Wednesday.

Mumbai | May 18, 2006 12:00 AM IST

2 min read

With metal prices and other global markets making a recovery, bulls charged back into action on Wednesday. The benchmark Sensex which fell by 463 points on Monday, bounced back by 344 points to 12, 217.81, extending gains for the second day.

The bull rally was led largely by metals, auto makers and banks. Tame US inflation data helped Tokyo snap six days of declines and other Asian markets also gained. ‘‘Commodities had bounced back and Asian markets had recovered, so that helped sentiment today,’’ said an institutional dealer.

‘‘But there is some amount of nervousness because of the big swings and selling by foreign funds, so we may continue to see volatility and investors will also be looking closely at global factors like oil and commodities,’’ he said. While Indonesia gained by 2.41 per cent, Singapore gained 1.39 per cent, South Korea 1.40 per cent, China 0.74 per cent and Taiwan 0.66 per cent.

The 50-issue NSE C&P Nifty index gained 3.17 per cent to Rs 3,635.10. The BSE index has had a volatile few days, losing 6.4 per cent in three straight sessions to Tuesday, with foreign funds selling $162 million worth of equities on Monday. But the Sensex is still up 30 per cent this year largely on the back of foreign fund investments of about $4.4 billion.

Traders attributed today’s rally to persistent buying by domestic mutual funds and financial institutions, firming Asian markets and overnight gains in metal prices on the London Metal Exchange (LME). Banking segment stocks hogged the limelight after the passage of Reserve Bank of India (Amendment) Bill 2005.

Despite negative FII activity, mutual funds and financial institutions continued their intervention in the market by placing fresh buy orders across the board.

Tata Steel climbed 6.8 per cent to Rs 612.25, while number two motorcycle maker Bajaj Auto added 4.7 per cent to Rs 3,267.70. ‘‘Banks rose on hopes of more flexibility from the central bank on setting banks’ minimum cash requirements after the parliament passed a bill on the RBI,’’ said a dealer.

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