Sensex bounces on political hope

Dalal Street staged a solid rebound on Wednesday with the BSE Sensex gaining 702 points, recouping nearly half of 1,460...

Dalal Street staged a solid rebound on Wednesday with the BSE Sensex gaining 702 points, recouping nearly half of 1,460 points it had lost in the previous three trading sessions. The Sensex and the S038;P CNX Nfity had slumped to its lowest level in nearly 15 months in mid-morning trade, but bounced back later, posting its biggest intra-day gain since March 25, 2008.

The recovery came partly amidst hopes that the Congress-led UPA government may be able to retain power on reports Samajwadi Party SP is likely to provide support to the government at a time when Left parties are on the verge of withdrawing support to the government over Indo-US nuclear deal. Gains in European markets, which opened after the Indian market, also aided the recovery on the domestic bourses. Key benchmark indices in France, Germany and UK were up between 0.69 per cent to 1.56 per cent.

After the severe battering in the last one week, the BSE Sensex today surged 703 points or 5.42 per cent at 13,664.62. Surging global crude oil prices, high inflation, higher interest rates and political uncertainty rattled Indian bourses over the past few days. The barometer index BSE Sensex had plunged 1,460 points, a fall of more than 10 per cent in the past three trading sessions to 12,961.68 on July 1, 2008 from 14,421.82 on June 26, 2008.

Consumer durables, banking, IT and capital goods stocks rose while FMCG stocks fell. FMCG index was the lone loser from sectoral indices on BSE. Realty stocks which were battered earlier in the day, bounced back sharply. DLF surged more than 15 per cent on buyback plans. Reliance Infrastructure and HDFC rose more than 10 per cent.

8220;High oil prices, inflation and interest rates will remain big concerns for the markets for some time. It8217;s too early to say whether today8217;s rally will continue or not. There was bottom fishing on Wednesday as many stocks were available for cheap rates,8221; said a BSE dealer. Oil rose more than 1 a barrel on Wednesday, within sight of Monday8217;s record high above 143.

ARE THE BULLS FINALLY BACK?

8226;The recovery came partly amid hopes that the UPA government may be able to retain power on reports Samajwadi Party likely to provide support

8226;Also, there was bottom fishing on Wednesday as many stocks were available for cheap

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8226;High oil prices, inflation and interest rates will remain big concerns for the markets for some time