Stocks bounce back after Monday blues

Stocks bounce back after Monday blues

By SiliconIndia   |   Tuesday, 03 April 2007, 05:00 Hrs
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New Delhi: The stocks bounced back in the afternoon session on 3rd April after plummeting in the previous session.

The benchmark BSE Sensex partially recovered to close 169 points higher on revival of buying by funds along with short covering by speculators in index-heavy stocks. It gained 115 points the morning session and consolidated the gain to 190 points before closing 169.21 points up, a net increase of 1.36 percent, to close at 12,624.58, largely due to a rebound in capital goods, PSU, IT and oil and gas sector stocks.

The sensex yesterday had recorded its second biggest fall of 617 points in reaction to Reserve Bank?s move to squeeze liquidity.

The wide-based National Stock Exchange index Nifty gained 57.05 points, or 1.56 percent, to 3,690.65 after moving between 3,703.05 and 3,632.20 points.

Market observers said apart from revival of buying by funds, covering up of short positions by speculators also helped stocks to stage comeback. They said firming Asian markets and overnight gains at US markets too influenced the trading here.

With renewed interest in PSU stocks led by BHEL, the PSU index was best performer among key indices and ended 122.30 points up at 5,796.78. The BSE IT index rose by 94.41 points at 4,766.97, capital goods index by 96.71 at 8,718.079 while Oil and Gas index recovered by 114.96 points at 6,287.21.

The positive sentiment was even seen in the rupee market, with call money rates remaining stable at 10-17 percent. The rupee rallied sharply against the dollar as a result of a 0.5 percent hike in the CRR and 0.25 percent in the repo rate by the central bank.
In a bid to contain surging inflation, the RBI had hiked the key rates on 30 March to suck out 19,500 crore from the economy.

In brisk activity at the Interbank foreign exchange (forex) market, the rupee resumed strong at 43.26/28 a dollar from a close of 43.45/46 on 30 March and later surged to 43.05/06 in late morning deals, reported a business daily.

Despite a plunge of 617 points in the benchmark sensex on 2 April, the rupee drew support from the central bank?s decision to raise key rates, which could trigger dollar selling by banks, said forex dealers.

The rupee had suffered a 1.7 percent fall, the worst one-day dip in 11 years to close at 43.74/76 a dollar following a suspected intervention by the central bank and hectic dollar coverings by banks on 29 March. After that, the local currency bounced by 29 paise in the last session on heavy dollar sales by banks to tide over liquidity squeeze in the banking system.

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