Bulls seize control; Sensex rises 900 pts

The bulls were certainly at the helm on Wednesday driving the Sensex over 900 points higher - its biggest intra-day gain ever. The rally took most market participants by surprise. Inspite of strong global cues, no one expected to see such a sharp rise given the sluggish FII participation this month.

Worries over US credit-related losses eased on Tuesday, after the CEO of Goldman Sachs said the firm would not be taking any significant charges to write off subprime mortgage losses and a positive guidance was delivered from retail giant Wal-Mart. Key US indices ended between 2.4 and 3.4 per cent higher.

Taking cues, Asian shares also posted sizable gains. The Nikkei rose 2.47 per cent, the Hang Seng added 4.90 per cent and the Straits Times climbed 1.42 per cent.

"The steep upmove has taken me by surprise. Global cues were positive, but other than that, there was no specific reason for such a huge rise. The market has clearly ignored factors like IIP numbers and the slow down of foreign money flows. Technically, we were looking at about a 500-point rise," said Suresh Kumar Iyer, technical analyst at Asit C Mehta Investment Interrmediates.

The Bombay Stock Exchange's Sensex rose to a high of 19,987.71, before settling at 19,929.06, up 894 points or 4.69 per cent over the previous close.

The rally was fueled by banking and oil stocks, and supported by metals and technology. HDFC Bank (up 10.81%), ICICI Bank (8.65%), Reliance Industries (7.11%), Hindalco Industries (6.95%) and Wipro (6.84%) were the biggest index gainers. All 30 scrips on the sensitive index finished with gains.

The National Stock Exchange’s Nifty closed at 5937.9, higher by 243 points or 4.26 per cent. The index touched a high of 5950.2 and low of 5700.05 intra day.

The market breadth showed 936 advances against 266 declines on NSE. On BSE, 2024 shares rose and 764 fell.

Banking shares were the star performers in today’s trade. The BSE Bankex shot up nearly 7 per cent to 11,225.82 on the back of gains in Punjab National Bank (up 9.46%), Oriental Bank of Commerce (7.6%), Union Bank (4.65%), Axis Bank (4.2%) and Bank of Baroda (3.95%).

Laggard sector - technology- also moved up significantly. The BSE IT Index was up over 4 per cent. Satyam Computer was up 4.92 per cent, Infosys Technologies added 4.84 per cent, Financial Technologies rose 3.97 per cent and Tata Consultancy Services gained 3.57 per cent.

Movement in the sector was attributed to value buying in stocks with good earnings and strong bottomline growth. The rupee ended higher against the US dollar at 39.32.

According to SEBI data, foreign institutional investors have been net sellers of Rs 2179.5 crore so far this month. Domestic funds, on the other hand, have been buyers, holding up the market.

"Predicting levels for tomorrow will be difficult; though traders could use a trailing stop-loss of 5830," Iyer said.

"I advise caution and expect profit booking at every rise. But if, for whatever reason, the rally does continue, we could see 6150-6200 levels on Nifty," he added.