539 points: the biggest Sensex jump in 7 mths

539 points: the biggest Sensex jump in 7 mths
Hindustan Times, HT Business, December 24, 2009, Page 21

The country’s premier stock market index, the Sensex, jumped by 539 points – its highest single-day gain in seven months— and soared past the 17,000-mark on Wednesday as news from all around signalled an optimistic mood that ended a months-long lull in the share markets.

The finance minister’s talk of an 8 per cent GDP growth possible in the current fiscal year, overnight data from the US on the housing sector and buzz that local oil companies will get cash instead of bonds for fuels sold below market prices spread cheer among investors and traders.

The 30-share BSE Sensex rose 3.2 per cent on the Bombay Stock Exchange (BSE) as it closed at a two month high of 17,231. The National Stock Exchange’s 50-share Nifty also gained 3.2 per cent or 154 points to close the day at 5,144.6.

Overnight in the US, housing stocks led the way up with the Dow Jones U.S. home construction index up 3.9 per cent following data that showed U.S. existing home sales rose in November at the fastest pace since February 2007.

“The market lagged participation over the past 10 to 12 trading sessions but it got a direction today and the domestic mutual funds and the insurance players invested in the market,” said Aseem Dhru, chief executive officer, HDFC Securities.

Foreign institutional investors (FIIs), however, stayed away.

“The finance minister’s reassurance to continue stimulus packages until the next budget resulted in huge short covering,” said Alex Mathews, head of research, Geojit BNP Paribas Financial Services. Short covering is the process in which speculators who expect the market to fall end up buying because the trend goes the other way.

Earlier, Japan’s Nikkei 225 rose 1.9 per cent followed by gains of 1.1 per cent and 0.8 per cent in Hong Kong and Chinese stock market on the back of.US home resales data which showed a growth of 7.4 per cent for November against an expected 2.5 per cent growth rate.

In India, the gains were driven by the metal and oil & gas sectors which saw their respective indices at the BSE rise 4.1 per cent and 3.4 per cent.