Post-Market Commentary. Monday, December 15, 2008

Sensex ends higher 1.47%; Nifty up over 2%

Expectations of a second tranche of fiscal sops from the government and hopes of additional interest rate cuts by the central bank to shield the domestic economy from the global economic recession, boosted the market in what was a highly volatile trading session.

The BSE 30-share Sensex advanced 142.32 points, or 1.47%, nearly 120 points down from the day's high and about 80 points off the day's low.

The market was caught between reports of a mixed bag of advance tax payment by top corporates, cutting of gains by European shares, lower US index futures and hopes of more measures by the government and central bank to revive demand in a weakening economy. Volatility in index heavyweight Reliance Industries (RIL) caused volatility in the key benchmark indices.
State Bank of India (SBI) has reportedly paid 56% higher advance tax of Rs 1,700 crore in Q3 December 2008 over Q3 December 2007. HDFC paid about 30% higher advance tax at Rs 279 crore. However, ICICI Bank paid 6% lower advance tax is at Rs 470 crore. RIL has paid almost the same advance tax as last year.
The market witnessed a bout of volatility. After an initial surge, the market pared gains before bouncing back again in morning trade. The market once again pared gains in early afternoon trade. The market lost further ground in afternoon trade. It soon came off the lower level and the recovery continued in mid-afternoon. The market once again pared gains in late trade before regaining strength later. The BSE Sensex swung 199.04 points between the day's high and low.

Factory output in India fell for the first time in more than 13 years in October 2008, the latest evidence of a rapid economic slowdown. The weak industrial output data for October 2008 has raised expectations of a suitable policy response from the government and the central bank to shield the domestic economy from the global economic recession. There is an anticipation of a second tranche of fiscal sops from the government and additional interest rate cuts by the central bank.

The BSE 30-share Sensex was up 142.32 points, or 1.47%, to 9,832.39. At the day's low of 9,749.29, the Sensex gained 59.22 points in afternoon trade. The Sensex jumped 258.26 points at the day's high of 9,948.33 hit in mid-morning trade.
The S&P CNX Nifty was up 59.85 points, or 2.05%, to 2,981.20.
Buying by foreign funds this month has lifted sentiments. From a recent low of 8,739.24 on 2 December 2008, the BSE Sensex has risen 1,093.15 points or 12.5% in the past eight trading sessions. Foreign funds have bought shares worth Rs 2,048.70 crore, till 11 December 2008. They are net sellers of Rs 52,688.50 crore in calendar 2008, so far.