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Market takes a U-turn

The Money Bureau

The market took a U-turn today with the Sensex rising by 7.3 per cent to close at 5,222 points. Sentiment changed dramatically with an across-the-board rally. The best indicator was the euphoria in brokers' offices as they greeted telephone calls with laughter.

The market opened the day with a gap of 120 points at 4987 points (which was also the day's low) and finally ended the day at 5222 points, a gain of 354 points. The Sensex ended the week with a gain of 222 points or 4.4 per cent gain, entirely due to today's rally. Except for today, it's been a tough week for investors.

The finance minister's withdrawal of income tax queries on five Mauritius-based foreign institutional investors was responsible for today's rally. The rally was broad-based. "Today's market saw an across-the-board rally with most of the stocks ending the day with a gain of at least 6 per cent," says a dealer. Devina Mehra, head of research, First Global, explains, "After such a rapid fall, the correction was imminent."

A fund manager with a leading foreign asset management company says, "The market sentiment which changed at the fag end of yesterday's trading session spilled over today with the key sentiment stocks like Himachal Futuristic, Global Tele-Systems and Satyam Computer staging a smart rally. Second, the decision by the finance minister to withdraw the tax notice on 5 of the affected FIIs changed the sentiment for good."

But the most important question is whether this turnaround is for real. Most of the brokers and fund managers feel so, but remain cautious. Pasupati Advani, director, Advani Share Brokers says, "Going ahead, we will see a steady rally in the market rather than the wild up-moves of the past. We also have to take note of the fact that the revised Sensex will be in play from Monday."

Nikesh Shah, head of research, Triumph International Finance, expects the Sensex to stabilise around the 5500 level next week. He says, "The weak players are out of the market and now the next wave depends on the results."

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