SENSEX RECOVERS BY 496 PTS

The domestic stock markets took an about turn on Wednesday as crude oil prices dipped, the US markets rallied and also the Asian markets traded higher. On the domestic front, end of settlement of July derivatives contracts also helped speculators to push up the market, despite substantial foreign fund selling. As a result, the BSE Sensex rallied 496 points to close at 14,287 with banking and real estate stocks leading the gainers. The day’s rally added Rs 1.35 lakh crore to investors’ wealth with BSE’s market capitalisation now at Rs 46.60 lakh crore. On Tuesday, crude oil prices had dipped to near the $120-a-barrel level which led to a 200-plus points rally in the Dow Jones Index. This in turn provided a positive cue to Asian markets like Hong Kong and Japan. As a result the Sensex opened over 200 points higher and picked up gains through the day to close 3.6% higher.Market players are however not sure that the gains could be sustained. And the main reason for this is that foreign institutional investors (FIIs) were on the selling side, although buying by domestic funds more than offset the magnitude of selling by the foreign funds. BSE data showed that during the day FIIs net sold stocks worth about Rs 630 crore while domestic funds net bought stocks worth Rs 670 crore.
Brokers and dealers said it could have been strong speculative buying, a day ahead of the expiration of July derivatives contracts, that lifted the Sensex. There is a high probability that the speculators would try to sustain the rally on Thursday, and after the settlement is over would again pull it down on Friday.
The day’s gainers were led by banking and real estate stocks, the two stocks which were the worst hit on Tuesday, after the RBI increased key policy rates beyond market’s expectations.