May 23: Snapping a three-day losing streak, the stock market clawed back with the sensex rallying by 341 points. Punters were cautiously optimistic about a recovery.
“The worst is now behind us,” said Shashi Bhushan of IL&FS Investsmart. “Indian markets will not witness the exuberance seen in the recent past. Now, the movements will be guided by the fundamentals which remain intact and we should witness an upward movement but in a phased manner.”
In Delhi, finance minister P. Chidambaram said calm had been restored.
“The system stood the test of volatility and the markets were able to complete the settlement of funds and securities smoothly. My advice to genuine long-term investors is to stay invested,” he added in a statement in Parliament.
“For some time now, experts have been suggesting that a technical correction of the market was unavoidable.”
Chidambaram admitted that the correction was sharper than expected and blamed it on the shakeout in the international markets, fall in metal prices and the hardening of global interest rates.
Yesterday’s fall was exacerbated by the payment problems of some traders.
“The stock market has now come out of the vicious circle resulting from the huge fall on Thursday, which triggered margin calls (pay-up demands) and forced investors to sell shares,” said V. K. Sharma of Anagram Securities.
The 30-share index closed trading at 10,822.78. The day began badly, though, with the sensex tumbling 296.29 points before staging a solid rebound late afternoon.
During the day, the National Stock Exchange issued statements to allay rumours that it had sold shares held in the accounts of some brokers to ensure smooth payment of margins.
It said it had not taken any such action. Market players said the statement helped restore sentiment spooked by fears of a looming payment crisis.
Indian shares have lost more than 17 per cent from their all-time high on May 11 at 12,671.11, driven by foreign fund sales of Rs 5,967.50 crore in the past eight trading sessions.
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