Business as usual, Sensex rebounds by 256 points

The S&P CNX Nifty jumped 79.60 points or 3.2 per cent to 2,557.35.

“The swift denial by the government on any probable malpractices or scam brewing in the markets boosted the sentiment. Also, volatility helps long-term investors who have found an excellent buying opportunity,” said Nilesh Shah, President, Kotak Mutual Fund.

While Prime Minister Manmohan Singh criticised a section of the media for its hit-and-run reports, which triggered the market crash on September 22, Finance Minister P. Chidambaram had reassured investors that the price-earning ratio was well within comfort zone and there was no scam in the market.

The Sensex had fallen by 279 points and small-cap index by 694 points in wildly swinging market on September 21 and 22.

The fall was triggered off by reports in a section of the media last week about the PMO’s office investigating the scam and that the Finance Ministry and Intelligence Bureau officials are closely watching the market.

Foreign funds as well as domestic mutual funds made aggressive purchases with renewed vigour in response to high hopes about strong second quarter corporate performance.

Interestingly, the FII data that is available only after market hours showed that FIIs sold equities worth Rs 325.50 crore on Friday. Earlier, on Thursday, when the index fell by 266 points, FIIs were net buyers at Rs 514.40 crore.

Market players are of the view that the correction witnessed in the last week provided excellent buying opportunity to investors — both retail and institutional — who went on a buying spree on Monday pushing up the indices.

Small cap and mid-cap stocks were, once again, in the limelight after being battered massively last week. The tough surveillance measures compounded with reduction in circuit filters could not stop the surge on Monday as the BSE Smallcap index outperformed the markets by gaining nearly 5 per cent or 271 points.

“The market has high expectations about the second quarter results. The market is in a bull phase now,” said stock dealer Pratip Bhavnani. The firmness in global markets also strengthened the Indian market on Monday.

The biggest gainers among the main index shares were Reliance Industries Ltd which rose 4.3 per cent to Rs 780.50, Infosys Technologies Ltd, which rose 3.5 per cent to Rs 2,484.05 and Oil and Natural Gas Corp, which firmed 3.1 per cent to Rs 1,020.05.