Markets crash, stage smart recovery on Chidambaram assurance (Lead)

September 18th, 2008 - 4:28 pm ICT by IANS  

SensexMumbai, Sep 18 (IANS) Despite huge early losses, Indian equities bounced back sharply Thursday and recovered almost completely by mid-afternoon following strong buying by domestic institutions and assurances of adequate liquidity by Finance Minister P. Chidambaram.“There is strong buying in Reliance, State Bank of India, Larsen and Toubro and other banking stocks,” said portfolio strategist and US-trained chartered financial analyst Manoj Krishnan of the New Delhi-based Price Investment Management and Research Services.

By mid-afternoon, the 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) had recovered to 13,248.75, down by just 14.15 points or 0.11 percent from its previous close of 13,262.90 Wednesday.

The broader based 50-share S&P Nifty of the NSE, on the other hand, recovered completely at 4,014.60, a gain of 6.35 points or 0.16 percent, against its previous close at 4,008.25 Wednesday.

The BSE opened with the Sensex crashing by more than 700 points on extremely weak global cues as the Dow Jones industrial average of the New York Stock Exchange closed Wednesday with a 440-odd points loss. All other European markets had also finished in the red Wednesday.

Asian markets also showed losses Thursday morning with the Hang Seng index of the Hong Kong stock market losing 7.5 percent over its previous close Wednesday.

“This led to punters entering the market with a gloom and doom outlook. But with domestic institutional buying and the finance minister’s statement assuring adequate liquidity, there was recovery,” Krishnan said.

The S&P Nifty too had opened nearly 200 points down but recovered enough to get into the green zone by mid-afternoon.

By mid-afternoon, the BSE mid-cap index was, however, still very much in the red at 5,020.29, down 119.34 points or 2.32 percent against its previous close at 5,139.63 points.

The BSE small cap index too failed to recover enough and was at 5,998.51, down 216.24 points or 3.48 percent over its previous close at 6,214.75.

“Buying was restricted to only about 70-odd stocks,” Krishnan said explaining the failure of smaller stocks to recover as much as those in the Sensex basket and other large cap stocks.

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