Stock markets consolidated above the psychologically important 10,000 level with benchmark Sensex on Tuesday posting a smart gain of 460 points, aided mainly by market regulator SEBI's warning against FII's lending and borrowing of Indian securities in overseas markets.
While the BSE barometer ended the day at 10,683.39, higher by 460.30 points, or 4.50 per cent, its counterpart on NSE advanced by 112.10 points, or 3.59 per cent, to close at 3,234.90 points.
Market participants said the regulator's warning to Foreign Institutional Investors (FIIs) registered in India against overseas lending and borrowing of Indian securities triggered speculation that the SEBI may impose curbs on short-selling.
Brokers said market sentiment was also boosted by positive trends in European markets in early trade and Reserve Bank's decision on Monday to cut repo rate by 100 basis points.
As per the data, FIIs had lent equities worth Rs 348 crore to overseas entities for the purpose of short-selling between October 10 and 14.
Marketmen said investors covered short positions after the market regulator disapproved of of the overseas lending/borrowing activity of FIIs and the consequent selling pressure in the cash market in India.
Analysts, however, said the market consolidation is a part of positive response to encouraging second quarter corporate results, which started flowing in the second fortnight of the month.
FIIs, however, remained net sellers in last week having pulled out Rs 4,651 crore, taking the total capital outflows to nearly USD 12 billion from equity so far in the current calendar year.
Consumer durables index which gained 8.95 per cent was by far the best performer on Tuesday. While realty index was a close second at 8.32 per cent, IT index also spurted by a little over six per cent.
Among the Sensex scrips, Jaiprakash Associates advanced by massive 16.25 per cent, easily the top most gainer in this elite club. It attracted buying on the back of excellent Q2 results. RIL, the heaviest among Sensex stocks also closed higher by 5.73 per cent.
Gaining for a second day, TCS move up by 12.86 per cent. RCOM too closed higher by a smart 11.25 per cent. Tata Steel and Satyam Computer at 10.20 and 9.84 per cent were the other prominent Sensex gainers.
Meanwhile, the trading volume remained the main cause of concern for investors. Total volume was low at Rs 3,882.49 crore.
Reliance Industries Ltd topped the list of highest traded securities with a turnover of Rs 301.66 crore followed by Reliance Capital (Rs 225.50 crore), ICICI Bank (Rs 172.23 crore), SBI (Rs 162.59 crore) and HDIL (Rs 159.65 crore).
The market breadth turned positive with 1,613 counters registering sharp gains against 975 losers.