Markets recover, climb fast on word that the Doctor is in

The benchmark index of the Bombay Stock Exchange (BSE) closed 371.86 points higher at 4877.02. The only time it had gained more was more than a decade ago, on March 24, 1992, when it climbed 426.05 points, or 13.1 per cent. The S&P CNX Nifty Index of the younger bourse, National Stock Exchange, recorded its highest-ever gain of 115.20 points, or 8.30 per cent, to end at 1,503.95.

In early trade, stocks were cheered on by the Reserve Bank of India’s (RBI) credit policy announcement that it had reduced the margin on bank lending against shares to 40 per cent from the current 50 per cent. ‘‘This is bound to have an all-round positive impact,’’ said State Bank of India Chairman A K Purwar.

Added Deepak Gupta, executive director of Kotak Bank: ‘‘It will give brokers that additional comfort. And it will help anyone who could have been in trouble because of the way the market has behaved in the last two days.’’

Market regulator SEBI’s chairman Gyanendra Nath Bajpai cut short his Jordan visit and held a meeting with exchange officials and depositories.

‘‘The market is safe,’’ he announced firmly. Bajpai said SEBI would keep a continuous watch on stock movements. Worries of a payment crisis cleared as many brokers settled Monday’s client transactions early in the day.

Later, as word got around that Dr Singh could be the next Prime Minister, the Sensex started to climb even more impressively. But the reaction was cautious more than celebratory.

After trading hours at Anand Dalal’s office, a stone’s throw from the Bombay Stock Exchange (BSE) building, the broker was cautious. ‘‘No, please don’t start celebrating sir. Wait at least three days,’’ he told a cheery investor who had just witnessed the benchmark index bounce back after yesterday’s 564- point blood bath.

‘‘It’s not their fault,’’ continued 42-year-old Dalal, dressed in a neat white shirt and dark trousers. ‘‘The markets picked up after Sonia’s statement and my clients are just happy but it is my resposibility to caution them against irrational buying or selling.’’ He said he would ask all his clients to watch from the sidelines until the Common Minimum Programme was announced.

Just outside Dalal’s office, near the towering BSE building, 52-year-old businessman C Satya Dev was, however, unmoved by all the activity around. Dev lost nearly Rs 50,000 in the meltdown yesterday. ‘‘I have been in the market for the last 20 years, so I know I will recover my money,’’ he said matter-of-factly. ‘‘But my son is a little worried about the stress that I am going through.’’