The Hindu : Sensex touches new high in volatile trading

Online edition of India's National Newspaper
Saturday, Jan 10, 2004

Business

Business

Sensex touches new high in volatile trading

MUMBAI, JAN. 9. After leaping to a new high of 6249.60 during early trading, late across-the-board sell-off by domestic financial institutions wiped out majority of gains and the Sensex ended 11 points up in an extremely volatile activity on the Bombay Stock Exchange here today.

The BSE benchmark 30-share index opened with a wide upward gap of over 100 points at 6211.06, breaking previous historic record trading high, and soared to new all-time peak at 6249.60 in response to the government's sweeping tax cuts. However, stocks later reeled under pressure as a result of basket selling reportedly by the Unit Trust of India after mid-session pulling the Sensex sharply down to the day's low of 6096.68 before ending at the new all time closing high of 6119.59 against yesterday's close of 6108.54, a net gain of 11.05 points. The BSE barometer had risen to the historic trading high of 6150.69 on February 14, 2000.

Investors were taken by surprise by the Government's move to rationalise the tax regime, which would help reactivate the economy in a major way. The elimination of 4 per cent special additional duty is expected to be a big boost to the economy, market sources said. Initially, sentiment was also bolstered by IT major Infosys Technologies' announcement of better-than-expected third quarter results. The initial euphoria that was expected to stay on during the session suddenly petered out due to UTI's heavy sell-off. Players also resorted to selling in sympathy.

With an eye on early Lok Sabha polls, the Government yesterday notified a `mini budget' providing incentives to both individuals and corporates, setting the mood for reforms. The market is still bullish being driven consistently by sustained FII inflows, strong corporate and economic fundamentals, encouraging GDP growth followed by the Securities and Exchange Board of India's decision to allow margin trading which was long-awaited by brokers. While the SEBI decision is expected to have a long-term impact on the market, the unexpected announcement of tax cuts enthused investors who went on a buying spree during morning trading, sources added. Foreign institutional investors remained net buyers even during the downward correction on Tuesday, making net investments of Rs. 467 crores in the first three sessions.

In brisk activity, the volume of business on the BSE rose to the 34-month high at Rs. 4134.61 crores from Rs. 3223.49 crores. The BSE had recorded a turnover of Rs. 4601.38 crores on March 7, 2001. The broad-based BSE-100 index, however, showed a fall of 9.96 points at 3287.23 against 3297.19.

In the specified list, 108 including 19 index-based counters registered marked to moderate losses while 89 others closed with gains. — PTI

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