Bulls return as Manmohan factor stabilises markets

With Tuesday’s gain of 372 points, the Sensex has now gained nearly 500 points in the last two trading sessions after losing a huge 565 points in Monday’s crash.

The NSE S & P CNX Nifty Index gained 63.90 points, or 4.25%, to end at 1,567.85.

Said BSE broker Venkatesh Aiyar, “Political developments continue to influence the mood of the market.” The decision of Sonia Gandhi to back out from the top post and the entry of Dr Singh as the top contender for the post kept the bulls busy.

Investors and dealers are happy about the choice Dr Singh, considered as the father of economic reforms in the country, as the Prime Minister. “Dr Singh will be able to steer the country like the way he steered the economy out of trouble in the 1991-95 period. He is also acceptable to other parties in the Congress-led alliance,” Aiyar said. They believe that Singh, who said the government would adopt a “selective” approach to privatisation, will carry the reforms process forward. The market was volatile in the last a few days on reports that the reform process will slow down.

Sensex had gained 160 points in the last one hour on Tuesday after news about Sonia Gandhi’s exit came out. Further, the RBI move to reduce margin on lending against shares also boosted the sentiment.

FII outflow of Rs 63.60 crore on Monday was much lower than their outflow of Rs 504.40 crore on Friday (May 14) and Rs 604.40 crore on Thursday (May 13). It’s clear that FIIs have not pulled out in a big way as expected.

PSU stocks gained ground on hopes that Manmohan Singh will maintain the pace of economic reforms. The BSE PSU Index gained 274.35 points, or 9.21%, to end at 3,253.36. From a recent low of 2,458.60 touched on May 17, the PSU index has recovered 794.76 points, or 32.32%.

While power equipment major Bhel (up 14.76%) spurted, ONGC (up 9.75%) recorded substantial gains on value buying after recent weakness. Other PSU pivotals MTNL (up 2.77%) and HPCL (up 2.46%) also ended up with modest gains. Bongaigaon Refinery (up 14.47% to Rs 56.95), Indian Oil (up 13.51% to Rs 397.90), Kochi Refineries (up 12.51% to Rs 167.70), MRPL (up 11.90% to Rs 47) and BPCL (up 4.87% to Rs 337.85) gained ground following the softening of global oil prices.

PSU stocks Nalco (up 10.37% to Rs 122.35), Steel Authority of India (up 7.71% to Rs 29.35) and Bharat Earth Movers (up 7.49% to Rs 122.70) also gained ground on fresh buying after recent fall.

Banking stocks also traded higher. The Bankex was trading 131.10 points, or 5.12%, at 2,691.18. State Bank of India rose from a low of Rs 453.30 to a high of Rs 532 in the intra-day trades before settling at Rs 525.75, up 7.11% over its previous close. ICICI Bank (up 1.38% to Rs 264.50) ended off its day’s high of Rs 273.50 on selling at higher levels after early gains.