Mumbai, May 13: Stocks clawed back from an initial funk to a modest gain after fears of a messy ballot outcome gave way to signs of a stable political switchover.
The BSE sensex closed with a 41.12-point gain to cap a see-saw session that began with a loss of 124 points — one of the weakest openings in the last four years — and saw a gyration of 356.31 points. The index crashed to a 22-week low of 5131.03 and scaled a peak of 5487.34.
Jitters over the prospect of a Hung House faded as investors encouraged by gains of the Congress and its partners swooped down on the trading floor for bargains.
“There was panic initially as no one thought the Congress would be leading. It was like any other election or budget day,” Ajit Sanghvi of MSS Securities said. “It was amid huge volumes and intense volatility that markets ended on a positive note, after having opened on a note of panic-selling,” he added. Dealers said volumes were at least 40 per cent higher than they are in the normal course of trading.
As the volatility would suggest, turnover rose sharply with the BSE registering a traded volume of Rs 3,254 crore compared with Rs 2,082 crore. Of the 1,690 shares that changed hands, 945 recorded gains, 682 suffered reverses whereas 63 remained almost unchanged.
Foreign institutional investors (FIIs) joined local institutions like LIC and UTI in helping stocks rally, giving a much-needed reprieve to shell-shocked retail players who were sitting on the fringes of the market. FIIs made net sales of Rs 998 crore on Monday and Tuesday and a little less than Rs 300 crore on Wednesday.
Among the market movers, software, cement, power did well, but it was Reliance that shored up indices.
Analysts have reservations about the influence the reform-wary Left will wield on a possible Congress government, but took heart from the fact that it would be stable.
Those spooked by the presence of elements opposed to the BJP-brand of reforms did rush to sell their holdings early on, but the selling wave waned after Congress’ reassurance that economic liberalisation was on.
Shares of PSU banks also lost ground. Bank of India lost 5.5 per cent at Rs 68, Union Bank of India 6 per cent at Rs 63, and State bank of India 3 per cent at Rs 604.
Bharti zoomed 4 per cent to Rs 160 on reports that it was eyeing Idea Cellular. The company has confirmed it is in discussions, an acknowledgement that generated record volumes for the stock on Dalal Street today.