Markets recover 40 percent of last week’s losses


Mumbai : Strong global cues and a pep talk from Finance Minister P. Chidambaram helped restore investor confidence in the Indian share markets Monday and equities ended the day in the green recovering nearly 40 percent of last week’s losses.

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Addressing a press conference minutes before the markets opened, the finance minister told reporters there was “no reason at all” for people to “act in haste or give room to panic”.

Pointing out that the Australian and two of the east Asian markets had opened on a positive note Monday, Chidambaram hoped the Indian equities markets would do the same.

This lifted spirits and the markets opened strong and rallied throughout the day to end in positive territory after a week of mayhem.

Revised figures at the website of the Bombay Stock Exchange showed that its benchmark 30-share sensitive index, the Sensex, actually closed at 11,309.09, up 781.24 points or 7.42 percent, from its previous close Friday at 10,527.85 points.

The broader-based 50-share S&P CNX Nifty index of the National Stock Exchange (NSE) closed at 3,490.70, up 210.75 points or 6.43 percent from its previous close Friday at 3279.95 points.

Revised figures showed that the BSE midcap index actually closed at 3,830.58 points, up 154.58 points or 4.21 percent from its previous close Friday at 3,676.00 points.

Similarly, revised figures showed that the BSE smallcap index actually closed at 4,514.15 points, up 158.70 points or 3.64 percent from its previous close Friday at 4,355.45 points.

Indian equities took their cue from four key Asia-Pacific markets, which returned to the green Monday after witnessing the worst ever week of mauling last week.

While Asia’s largest stock market in Tokyo was closed for a public holiday after slumping 24 per cent last week, Hong Kong opened 2.4 per cent up, rebounding after its steepest weekly decline in a decade.

Australian shares were almost five per cent up in the morning session after the government announced plans at the weekend to guarantee bank deposits, sending shares in the financial sector sharply higher.

In a bid to shore up the market, Australia’s central bank also pumped A$2.85 billion (US$1.9 billion) into the financial system to ease the grinding liquidity crisis.

The benchmark S&P/ASX 200 was up 4.8 per cent to 4,153.8 at noon with financials and mining shares leading Asia-Pacific’s second largest market upwards.

The Hang Seng index of the Hong Kong stock market was up 3.24 percent at 10.30 a.m. Indian time, the Seoul Composite index of South Korea’s Seoul Stock Exchange was up 2.38 percent and the Strait Times index of the Singapore stock exchange was up 1.99 percent.

During the day, the panel formed by the Indian government to look into the financial crisis held its first meeting and reports said it will hold more meetings with market and banking regulators before it submits its report to the government.

All this helped to calm sentiments.

“Concerted European action to strengthen the banking system has given the much-needed confidence that investors were looking for,” said Jagannadham Thunuguntla, head of the capital markets arm of India’s fourth largest share brokerage house SMC Group.

Also a statement from Barclay’s of UK saying that it did not need government help to weather the current financial storm and that it could survive on its own also helped boost sentiments, analysts said.

The bank said Monday that it would raise on its own 6.8 billion pounds or about $11 billion by selling its shares to private investors.

In all, it will raise 10 billion pounds or about $17 billion through other measures such as skipping dividend this year, the bank said.

Analysts said this indicated that confidence was coming back to the market and private investors were once again showing signs of renewing investments and bringing in much-needed liquidity to global markets.

Among the shares that make up the Sensex, only Ranbaxy Labs and Oil and Natural Gas Corp lost 6.07 percent and 0.03 percent, respectively. All other Sensex component stocks were in positive territory.

Reliance Communication gained the most at 18.93 percent, Reliance Infrastructure gained 16.76 percent, ICICI Bank gained 16.75 percent and Sterliete gained 15.84 percent.

As many as 1,689 or 63.16 percent of all shares traded advanced, 927 or 34.67 percent declined and 58 or 2.17 percent remained unchanged.