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Clinton's decision triggers turnaround talk, spurs heavy FII buying; Sensex spurts 99 points, 2983.67

Rediff Business Bureau

India's premier bourse, the Bombay Stock Exchange witnessed bullish trend with the BSE Sensex registering a remarkable gain of almost 100 points on heavy buying support by foreign institutional investors and bull operators today.

Thanks to the the US President Bill Clinton's decision on Saturday to lift a bulk of the economic sanctions which the states had imposed on India to protest against its nuclear tests in May last.

BHEL, Crompton Greaves, East India Hotel, Telco, Gujarat Ambuja, ICICI, G E Shipping, Ballarpur Industries, ICICI, ITC, State Bank of India, Corporation Bank, Reliance were at the forefront among the gainers, while Wipro, Pentafour Software and Infosys Technologies reported small to moderate losses, dealers said.

The US decision was unexpected to the market, and therefore it has improved market sentiments on the bourses, Jignesh Shah, AVP-Research, at the Triumph International Finance India Limited said.

Reflecting the bullish phase, the 30-scrip BSE Sensitive Index opened at 2955.77 points, and, surpassing the psychological barrier of 3000 mark, touched the day's high of 3004.43, then fell below the important mark to touch the day's low of 2954.57 points and finally ended at 2983.67 points, showing a net gain of 99.30 points over the previous close of 2884.37 points.

Today's upswing is being interpreted as the beginning of the turnaround for the Indian economy. It was on May 12 that the Sensex crashed 77 points, from 4022.20 to under the psychological barrier of 4000, to end at 3945.13 points. This was a day after the Bharatiya Janata Party-led coalition government at the Centre announced that nuclear tests were conducted in Pokhran in Rajasthan.

The bomb news then hammered the market sentiment down as fears that the US and European countries would discontinue financial support and sanctions spread. The fears were to become facts as months passed by. The FIIs and speculators went on a selling spree that continued almost through to the day.

Software shares were the major losers then, while prominent scrips like Hindustan Lever, ACC, State Bank, Reliance and Telco also suffered badly.

The market would have gone down further, however, had not the domestic institutional investors entered the market and supported it.

As panic gripped the market in the second week of May, BSE president J C Parekh had said: "This is an initial reaction from the market participants, fearing a freeze on financial aid by European countries and some sanctions by the United States. But the market will pick up soon."

That was not to be. From 4022.20 on May 11 to 2884.37 on November 6, India's premier share index fathomed depths as low as under 2700, as crisis after new crisis like the UTI US-64 episode conspired with the sanctions factor to keep revival attempts at bay.

In retrospect, it must be said to Parekh's credit that he was prescient enough to go on record then that if the US imposes sanctions, the inflow of investment and funds will be restricted which would automatically affect market sentiments in Bombay.

With Bill Clinton announcing last Saturday that the sanctions will be, after all, lifted, the FIIs, the domesitc FIs, stockbrokers, and anybody and everybody connected with the bourses, seemed to have heaved a collective sigh of relief today.

Today, the broad-based BSE-100 index advanced smartly by 41.34 points to 1324.56 points from the previous close of 1283.22 points. The BSE-200 and Dollex indices closed higher by 8.72 and 3.60 points to 305.91 and 120.49 points from Friday's close of 297.19 and 116.89 points respectively.

The anaylists, however, said that the market is likely to suffer a minor correction tomorrow in view of last day of trading cycle on the National Stock Exchange.

From the figures available from market, the total purchases by the FIIs on the BSE stood at Rs 160 million against the sales worth Rs 270 million, thus registering a net outflow of Rs 110 million. Total purchases by the domestic institutional investors were reported during the day was Rs 280 million against the sales worth Rs 480 million registering a net outflow of Rs 200 million.

Total turnover on the BSE was Rs 13.18 billion. Satyam Computers topped the list by registering the highest turnover of Rs 1.74 billion followed by ITC (Rs 1.69 billion), Reliance (Rs 1.46 billion), Pentafour Softwar (Rs 1.40 billion) and SBI (Rs 1.29 billion).

Other actively traded counters were Telco (Rs 548.5 million), MTNL (Rs 422.9 million), ACC (Rs 374.1 million), Zee Telefilms (Rs 360.7 million), Tata Tea (Rs 290.7 million), L&T (Rs 289.3 million), Tisco (Rs 187.8 million), Castrol (Rs 184.7 million), Raymond (Rs 148.3 million) and BHEL (Rs 121.6 million).

Additional inputs from UNI

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