Sensex shows a plus, players nonplussed

MUMBAI: Shares went on a firesale again on Tuesday, but prices fell so low that bargain-hunters had a field day.

The day began on a note of despair as the Bombay Stock Exchange Sensex moved 444 points down from Monday’s close of 11,822, but as eager buyers hit the buy button, the index recovered dramatically to touch an intra-day high of 11,955. It ended the day at 11,874, up 51.53 points from its previous close.

The positive close may, however, bring only a temporary relief for investors, for the real story of the day was volatile uncertainty.

The intra-day swing of 533 points is the Sensex’s highest, if one leaves aside the 793-point yo-yo of May 17, 2004. The recovery of 495 points from the day’s low was the second highest recorded by the index after April 28, 2006’s 507 points.

Shares acted like manic-depressives. As many as 66 of the 2,500-and-odd stocks traded on the BSE swung more than Rs 100 between their intra-day highs and lows. Overall, the market breadth was negative, with falling shares outnumbering rising ones 2.5:1.

 “Institutional buying, both from domestic and foreign investors, has been rather low for this level of the index. Stock prices were rising mainly on account of retail buying, which suggests that stocks are going into weaker hands,” says DD Sharma, senior vice-president of Anand Rathi Securities.

However, VK Sharma, head of research at Anagram Securities, is confident about Wednesday: “I expect the markets to rise from here, but don’t see it making new highs.”

All sectoral indices have declined since the Sensex touched an all-time high last Wednesday (May 10). The BSE Metal and Oil & Gas indices have been the biggest losers, declining by 12% and 10.4% respectively.

“The upside potential of the market is limited beyond the 12,500 level. We are telling investors to shift from momentum stocks in sectors like metals, auto and oil and gas, into the most defensive sector these days - banking,” says Sharma.