The Telegraph
Since 1st March, 1999
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Manmohan mesmerises markets
Sensex back above 5000

Mumbai, May 19: The markets are breathing easy again. Buoyed by reports that Manmohan Singh — the poster boy of Indian reforms — is set to become the next Prime Minister, shares extended their gains for the second successive day. The sensex topped the key 5000 mark and closed with a gain of 129 points.

The capital markets, which were intensely watching the developments unfolding in the capital throughout the day, witnessed volatility as faint doubts lingered that Sonia Gandhi may give in to the wishes of party members and take up the Prime Minister’s post.

The day began on an optimistic note when the BSE 30-share index opened positive at 4941.72 and later rallied sharply beyond the 5000-mark to the intra-day high of 5059.89. Operators who did not get the opportunity to offload their positions during the last two sessions, booked profits at higher levels.

While equity values did come off their highs following such profit booking, they again started looking up following news that DMK will participate in the government.

However, the uncertainty over who would ultimately become the Prime Minister continued to linger and attempts by senior Congress leaders to persuade Sonia Gandhi to reconsider her earlier stand saw equities retreating from their gains.

“There was this news conference by Ambika Soni and Jaipal Reddy where they talked about approaching Sonia Gandhi again. This saw the sensex retreating from its gains,” a broker said. The key index resumed its climb again when reports filtered in at around 2 pm that Sonia was interested in the post.

The sensex ended the day at 5006.10 compared with Tuesday’s close of 4877.02, a net rise of 129.08 points or 2.65 per cent.

Analysts tracking the equity markets say that although the market has now factored in the appointment of Singh as the next Prime Minister, stock values will now be largely news driven over the next few days.

News that Singh will become the next Prime Minister boosted the bruised PSU and banking scrips. The BSE-PSU index flared up by 274.35 points or 9.21 per cent to close at 3253.36 from the previous close of 2979.01 and the banking index shot up by 131.10 points or 5.12 per cent to 2692.18 from 2561.08.

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