The Hindu : Business : Wild swings in Sensex

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Saturday, Apr 08, 2006

Business

Business

Wild swings in Sensex

MUMBAI: Speculations about a participatory notes problem as also suspension of some foreign funds played havoc on the Bombay Stock Exchange, whose benchmark index swung by a huge 366 points during the session that started with strong hopes of a liberal bonus from IT major, Infosys. A quick denial by the Securities and Exchange Board of India (SEBI) on the participatory note problem, however, had a soothing effect on the market, aiding the Bombay Stock Exchange sensex to recover partially after mid-session.

This is the largest intra-day swing after May 18, 2004 when the market hovered in a range of 401.52 points. On May 17, 2004, the market had swung by a record 793 points during the session in reaction to uncertainty over economic reforms and delay in the finalisation of a Common Minimum Programme.

After flaring up to an all-time high of 11,930.66 in early trading on Friday, the sensex later came under a heavy onslaught of selling and slid to the day's low of 11,564.99 as rumours regarding participatory notes and suspension of some foreign institutional investors spread like wild fire in the market.

The sensex later ended the day at 11,589.44 against Wednesday's close of 11,746.90, a net loss of 157.46 points or 1.34 per cent. Investors credited the sensex's initial flare up to near 12,000 mark to expectations of a liberal bonus from the IT major, prompted by the company's announcement that the board meeting to be held on April 14 will consider a bonus issue. Market players, however, discounted Friday's upheaval as a panic reaction, but the market needed a healthy correction after a strong rally of 467 points or 4.14 per cent in the first three days of the week. FIIs and local mutual funds, which reported slowdown in inflows on April 4, were believed to heavy sellers.

Operators and retailers too resorted to heavy sell-off in a bid to square off positions. The heavyweight counter Infosys Technologies, which commands high weightage in the sensex, fluctuated in a wide range of Rs. 3,400 and Rs 3151.30 before closing at Rs 3166.00 over previous close of 3114.40. — PTI

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