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Key equities index ends green but jitters continue

National,Business, Mon, 20 Oct 2008 IANS

Mumbai, Oct 20 (IANS) A key Indian equities index ended in the green Monday after showing
great volatility during the day but continued selling by jittery investors saw midcap and smallcap
stocks finish with lossess.At the close of trading, the sensitive index (Sensex) of the Bombay
Stock Exchange finished at 10,223.09, up 247.74 points or 2.48 percent from its previous close
Friday at 9,975.35 points.

The Sensex opened at 10,160.47 points, rallied to touch an intra-day high of 10,538.05, a gain of
562.7 points or 5.64 percent against its previous close before sliding again.

With the markets sliding for three successive days last week, the stage was set for short sellers to
book profits, which could be one of the reasons the Sensex rallied initially and still end in the
green despite the undercurrent of negative sentiment, analysts said.

At the National Stock Exchange, the broader 50-share S&P CNX Nifty index also showed a
similar trend - opened strong, rallied and then dipped even below its previous close Friday before
recovering again to end in the green.

At close of trading, the Nifty was at 3,122.80, up 48.45 points or 1.58 percent from its previous
close Friday at 3074.35 points.

The Nifty had also moved up by more than 250 points before sliding.

Although the Sensex ended in the green, both midcap and smallcap stocks finished with losses,
reflecting the lack of depth in the positive sentiment.

The BSE midcap index closed at 3,506.35, down 38.49 points or 1.09 percent from its previous
close Friday at 3,544.84 points.

The BSE smallcap index finished at 4,112.82, down 55.04 points or 1.32 percent from its
previous close Friday at 4,167.86.

“There is far too much uncertainty and it is very difficult to say what the short term trend is
going to be,” said Ashish Kapoor, chief executive officer of Delhi-based brokerage firm Invest
Shoppe India Pvt Ltd.
“Normally, such times are good for buying stocks but this time it is a deep hollow and with the
largest economy in the world, the US, going into a tailspin it is better to hold on to cash and wait
and watch before taking any decision,” Kapoor added.

Echoing similar sentiments, Jagannadham Thunuguntla, head of the capital markets arm of
India’s fourth largest share brokerage firm, the Delhi-based SMC Group said: “You can price
risk and include this in your calculations, but you cannot price uncertainty, so decision-making is
difficult in these unprecedented times.”

The analysts said that the fact that midcap and smallcap stocks had ended in the red indicated
that there was no depth in the recovery and whatever rally took place was only because of short
covering.

“There is still no confidence in the market and no one is willing to lend or invest,” said Gautam
Mazumdar, chief underwriting officer of HDFC ERGO General Insurance Co. Ltd.

Information technology, technology, media and telecommunication (TMT), bank and fast
moving consumer goods stocks were the major gainers.

Realty, power, capital goods and automobile stocks were the major losers.

Among the major gainers were TCS Ltd, which gained 9.47 percent, Wipro Ltd up 8.95 percent,
Satyam Computers up 8.67 percent and Infosys Technologies up 7.92 percent.

The big losers were BHEL shedding 8.24 percent, Grasim Industries losing 7.96 percent, DLF
Ltd down 6.40 percent and ACC Ltd losing 6.13 percent.

Reflecting the lack of depth in the recovery, only 920 or 35.17 percent stocks advanced, as many
as 1,643 or 62.81 percent stocks declined and 53 remained unchanged.

“Despite the various measures being taken by central banks all over the world, there is still no
confidence or enthusiasm in the market,” Thunuguntla pointed out.

On Monday the Indian central bank, the Reserve Bank of India (RBI) cut the repo rate - the rate
at which the it lends to other banks - by 100 basis points to 8 percent, but there was little impact
on the markets.

“Even now, the repercussions are trickling in with Hungary now seeking the help of the
International Monetary Fund and the European Central Bank even as the Dutch government
made an infusion of $14 billion into ING Bank,” Thunuguntla said.

“If anybody still wants to buy in this market, it should be very staggered and only in those blue
chips, perhaps sensex component stocks, that have very low debt on their books and are well
protected against recession in most markets,” Kapoor said.