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It’s been the best week in nine for the Sensex

The Sensex posted its biggest gain in nine weeks, riding on a late burst of strong buying on Friday to close 125.42 points up.

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Index rises 5.23% or 517.

MUMBAI: The Sensex posted its biggest gain in nine weeks, riding on a late burst of strong buying on Friday to close 125.42 points up.

With this, the index has ended up in four out of five sessions this week, totting up gains of 5.23% or 517 points. Investor wealth is up by Rs 1.64 lakh crore to Rs 26.95 lakh crore.

So investors have may quite be back on their feet after the recent fall. Only, they seem to be making nifty entries, in spurts and across stock segments.

“After the correction, mid-cap stocks which have good earnings visibility are becoming more attractive. As far as volatility is concerned, it is here to stay. The markets will stabilise around 9,500-10,000 levels, taking a cue from the first quarter results and the progression of the monsoon,” said Amitabh Chakroborty, business head, Brics PCG.

From extremely high valuations, stock have now come down to levels that are reasonable and in some cases, even attractive.

Amit Rathi, managing director of Anand Rathi Securities feels that one can expect volatility till the Fed meets on June 29, 2006. “The direction the markets will take will depend on how the Fed’s statement is worded. Of late, they’ve been only concerned about inflation. If they and other central banks around the world acknowledge that growth is also a worry, then it will send some clear signals as to how interest rates would move. This could bring some stability to the markets,” said Rathi.

From its high on May 10, 2006, the Sensex had lost 3,682.94 points or 29.2% up till June 14, 2006, the day it closed at a low of 8,929.44 points. But since June 15, 2006 it has recouped 40% of the losses. But no one’s expecting it to go to those dizzy heights of 12,500 any time soon.

Meanwhile, the BSE Midcap and Smallcap indices, which were hit harder than the benchmark index for heavyweights, and had declined by 38.3% and 42.4% respectively between May 10, 2006 and June 14, 2006, have been slower to make good their losses. Till Friday, they had recouped just 30.3% and 31.1%, respectively.

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