Sensex spurts 121 points

MUMBAI, June 29: The financial markets staged another rally as foreign institutional investors FIIs returned to the stock markets and the ...

MUMBAI, June 29: The financial markets staged another rally as foreign institutional investors FIIs returned to the stock markets and the rupee gained further against the US dollar. Heralding the reentry of bulls, Sensex shot up by 121 points on the Bombay Stock Exchange while the rupee strengthened by nearly 10 paise to 42.52 against the US greenback.

The sudden spurt in Sensex was attributed to renewed buying interest by FIIs, stabilising of the rupee, hopes of the political uncertainty being sorted out and sanctions being diluted. While the NSE-50 index zoomed by 24.75 points to 949.10, Sensex crossed the 3,200 mark and closed at 3,289.56.

The markets which were hit by sanctions and downgrading in the last fortnight heaved a sigh of relief when the World Bank approved a 543 million loan last week. 8220;There are indications that the World Bank will approve more loans. After initial hiccups, we will now be able to survive the sanctions,8221; said a fund manager.

However, the stock market operators arestill cautious and forex dealers are adopting a wait-and-watch approach. 8220;The sentiments was certainly upbeat today but the question is the sustainability of this bullish rally. The political instability is a major hurdle still to be crossed,8221; said an equity analyst, adding that the market has not yet bottomed out and today8217;s bull rally was inspired by FIIs and FIs. 8220;FIIs were major sellers last week. One doesn8217;t know when they will change their stand,8221; he said.

FIIs made fresh purchases in software, pharma and MNC scrips, while the domestic institutional investors picked index-based scrips like MTNL, SBI, BHEL, Reliance and Tisco and others. Marketmen also attributed the current bull phase to the recommendation for share buy-back by the committee of secretaries, fresh sops for FIIs for investments in India and recovery in the global depository receipts GDR market.

As many as 50-70 counters attracted the circuit breaker limit 8211; share prices of these scrips crossed the 10 per cent permissibleincrease 8211; and several other counters were up by around 5 per cent. Software, pharma and multinational shares were in good demand.

In the forex market, the rupee opened at 42.60/62 and went up to 42.50/52 level, due to heavy dollar selling by exporters while the demand was moderate and remained at the same level most part of the day without any significant movement. The rupee closed at 42.52/54 against 42.62/64 on the previous close, strengthening by 10 paise.

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The decision by the World Bank to approve a multi-sector 543 million to Andhra Pradesh, the government8217;s decision to pull out all the stops to attract more foreign direct investment and the US government8217;s likely review of the sanctions under the Glenn Amendments in July, has instilled confidence in the market, forex dealers said.

It may be recalled, the foreign exchange reserves of the country had also depleted by nearly one billion in the last one month following the FII selling in the market and RBI intervention to prop up the rupee.