Day after, Sensex swings to end flat

The BSE Sensex ended the day flat at 8,222.59 points, up just 1 point from its previous close. The NSE Nifty closed at 2,477.75 points with a gain of 1.25 points from its previous close.

‘‘There is no need to panic,’’ Damodaran said from New York while commenting on the high level of volatility in the markets and reports of probe by various government agencies. He cautioned investors to take informed decisions and not get carried away by hype or day-to-day events.

Chidambaram also said there was no cause for concern. ‘‘There is no scam in the market, but there could be one or two ‘adventurous’ players in the market. The price-to-earnings (P/E) ratio for Nifty, Sensex, Nifty Junior, S&P 200 scrips are well within comfort zone,’’ he said, adding that there was no probe by the ministry as reported by a section of the media.

The clarification from the Prime Minister’s Office also soothed frayed nerves in the market. However, the market witnessed alternate buying and selling throughout the session. While domectic operators and retail investors sold across the board again, many funds mopped up shares at lower levels.

Analysts said the correction is likely to continue in the next few days as the Sensex had shot up by 750 points in the last 20 days. ‘‘We have had a long run so far, so this correction was long overdue. But this correction is within limits, although this market can stay bearish till the next earnings season in October,’’ said Vibhav Kapoor, Chief Investment Strategist, IL&FS.

The Sensex started the day’s trading session with caution after Thursday’s fall. The sustained inflow from FIIs and mutual funds helped the Sensex open higher by 33 points over its previous close at 8,255 points and then immediately went on to hit a high of 8,327.35 points on opening on buying support in heavyweights. The low for the day was 8,121.81 points.

The Sensex proved very volatile and showed a swing of 206 points in the course of the day. It recovered close to 100 odd points from the low of the day at the finish.

Said Rahul Rege, head of research, Sharekhan, ‘‘We are likely to see this kind of volatility in the market over the next few days till the leverage position is reduced.’’

Small and mid-cap stocks encountered selling pressure again in the opening session. However, these stocks recovered later in the day. The BSE Small Cap index was up 0.47 per cent, and the BSE Mid-cap index was up 0.94 per cent.