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New-look Sensex spurts by 225 points

The stockmarkets continued their inexorable rise today, riding piggyback on a wave of good news: the revision in Sensex, a healthy 178-point jump in the NASDAQ, the return of foreign funds with a bang, the easing of margins, and the anticipation of good corporate results.

The Bombay Stock Exchange's Sensitive Index, the Sensex, soared to close at 5444 points rising by 225 points, or 4.31 per cent, over its previous close.

The National Stock Exchange's S&P CNX Nifty closed at 1609 points, a gain of 3.33 per cent, or 52 points, over Friday.

With positive developments on all fronts, the market opened with a huge gap and gained further ground. All the top software stocks hit the upper circuit at the open and remained there for a major part of the day.

Monday's rally was fuelled by bull operators and supported by mutual funds. Even the foreign institutional investors, or FIIs, too made heavy buying in the key scrips.

The revamped Sensex came into force from today as Indian Hotels, IDBI, Tata Chemicals and Tata Power made way for Reliance Petroleum, Satyam Computer, Dr Reddy's, and Zee Telefilms.

Three of the new scrips hit the upper circuit, registering sizeable gains, dealers said. If the previous 4 scrips were to remain in the Sensex, the rise would have been limited to about 198 points, instead of the 225-point jump that it managed. This shows that the new scrips provided a 27-point boost to the Sensex.

The Sensex had touched a day's high of 5533, but following some profit-booking at Hindustan Lever, Reliance Industries and ITC counters, it slipped by almost 90 points to 5444 at the close of day.

Some analysts were of the view that Monday's rally was 'suspect' and opined that some big operators were behind this spurt on the markets. This would lure the small investor or the retail buyer lured to the bourses once again, the analysts said.

Some dealers, however, expect information technology to rise further, saying that the time is good to make purchases at these counters.

Operators said that the software, media and telecom stocks were the biggest gainers of the day. The engineering, fast moving consumer goods, cement, chemical, consumer durable, pharmaceuticals and many other sectors were also in the limelight.

A fund manager with a leading foreign asset management company says, "The market sentiment which changed at the fag end of yesterday's trading session spilled over with the key sentiment stocks like Himachal Futuristic, Global Tele-systems and Satyam Computer staging a smart rally."

Although there has been a lot of noise regarding the high-technology stocks after the correction at the NASDAQ, the new economy scrips are still being seen as sound investment areas, especially from the long- to medium-term perspective.

According to marketmen, new economy stocks have again led the rally, which has helped the Sensex surge ahead dramatically.

Huge buy orders in the infotech stocks helped the Sensex consolidate its gains, dealers said and attributed Monday's 3.87 per cent gain in the NASDAQ composite index as well as rise in the Infy and Sify's ADRs as one of the market moving factors.

Majority of the stocks heavy-weighted stocks from the Sensex group hit the circuit filters and remained in the circuit for most part of the day affecting the business volume as well as preventing the operators to buy or sell in the market, dealers said.

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