Sensex soars, FIIs back to buying ways

Even as Indian markets 8212; led by Reliance Industries, bank and metal stocks 8212; caught up with other global markets with a 8.2 per cent rally...

Even as Indian markets 8212; led by Reliance Industries, bank and metal stocks 8212; caught up with other global markets with a 8.2 per cent rally on Friday, foreign institutional investors FIIs who were big sellers in October turned big buyers on Friday for the first time after several weeks. As per provisional figures available with the stock exchanges, FIIs bought 250 million around Rs 1,237 crore on Friday.

FIIs who were selling 100-250 million on a daily basis had pulled out 3.8 billion from Indian stocks in October alone, taking the total withdrawals from India to 12.9 billion in calendar 2008. In September, FIIs had pulled out 2.05 billion. 8220;It8217;s for the first time after several weeks that FIIs have invested this amount. But it8217;s too early to say that FII selling is over,8221; said a market source.

On the other hand, domestic funds sold stocks worth Rs 116 crore on Friday. A steep rate cut by the US Federal Reserve, decline in inflation for the fifth successive week below the 11 per cent level and market buzz the government is considering more measures to pump in liquidity in the financial system, triggered a solid surge on the bourses. The BSE Sensex soared 743.55 points or 8.22 to 9,788.06.

After a strong rally in mid-morning trade, the market came off the higher level on weak opening of the European markets only to bounce back again in late trade. Bank stocks spurted on fall in inflation. IT stocks jumped on rise in American depository receipts ADR overnight. Reliance Industries, India8217;s largest private sector company by market capitalization, surged 13.81 per cent to Rs 1,37.75 as investors made bargain hunting.

With the inflation dropping to 10.68 per cent, experts now expect the central bank to reduce the interest rates further. Banking stocks jumped as the fifth successive week of decline in inflation has given more room for the central bank to cut rates, said a dealer Global markets had rallied on Thursday after the US Federal Reserve cut its main policy rate to 1 per cent on Wednesday to stave off the credit crunch. The Indian market was closed on Thursday on for a public holiday and therefore it reacted to the global rally on Friday.