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Zooming Sensex faces ifs and buts of polls

The Sensex saw its largest single-day gain of the year on Monday with a 6.4 per cent jump, but market experts are tempering their bull run cheer with an eye on pending election results that could play a spoiler.

business Updated: May 04, 2009 23:14 IST
HT Correspondent

The Sensex saw its largest single-day gain of the year on Monday with a 6.4 per cent jump, but market experts are tempering their bull run cheer with an eye on pending election results that could play a spoiler.

Signs of a stable economic revival are helpful.

“We have election results round the corner. Depending on the coalition and other political uncertainty, a big rally in markets is not likely,” said Avinash Gupta, assistant vice-president, equity research at Bonanza Portfolio Ltd.

“Historically we have witnessed consolidation after such rallies,” said KN Sivasubramanian, Senior Portfolio Manager - Equity, Franklin Templeton.

The index’s surge past 12,000 was aided by macroeconomic factors and corporate valuations.

“Attractive valuations also acted as the catalyst for liquidity to chase emerging markets, which remain less vulnerable and expected to continue to log in growth higher than the their peers in the developed world,” said Dinesh Thakkar, Chairman and Managing Director of Angel Broking.

But he added that he did not rule out near-term volatility due to event risks such as election outcome.

Anil Advani, Head – Research, SBI CAP Securities linked the Sensex surge to money flowing into Asia. “Emerging markets are where the growth is,” he said.

Riding on improved fundamentals improved sales in industries like automobiles, cement and steel, the benchmark index of Bombay Stock Exchange climbed 731.5 points to end at 12,134 points. The Sensex posted gains of 48.4 per cent from its lows of 8,160 mark in March 2009. The 50-share Nifty of National Stock Exchange went up 180.05 points or 5.18 per cent to close at 3,654.00 from its previous close.