Sensex cheers Wall Street gains

The Sensex posted its second biggest gain this year at 928.09 points (6.07 per cent) to close at 16,217.49, reports MC Vaijaynthi.

If the collapse of US investment firm Bear Stearns and the $2 dollar a share buyout by JP Morgan sent the world markets crashing last week, the sentiment reversed as the latter upped its offer to $10 on Monday.

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The Sensex joined markets in rejoicing in the JP Morgan offer and positive housing data from the US. The Sensex posted its second biggest gain this year at 928.09 points (6.07 per cent) to close at 16,217.49.

“Confidence has returned to the markets which believe if there is any further trouble in banks there will be bail-outs,” said MAA Annamalai of Akshaya & Co.

Buying interest in equities emerged among foreign funds which, according to provisional NSE data, bought stocks worth a net Rs 1,246 crore. Indian funds too were buyers to the tune of Rs 399.97 crore.

Traders who had sold short in anticipation of a further fall in markets bought shares to cover their positions. “I wish the outlook remains positive. It is too early to call. Today we were coming out of the oversold zone,” said Phani Sekhar, fund manager, Angel Broking.

Among the other Sensex stocks Jaiprakash Associates surged 16.4 per cent to Rs 233 after the firm said ICICI Bank bought a 1 per cent stake in its subsidiary, Jaypee Infratech, for Rs 250 crore. ICICI Bank, which had suffered a steep fall in recent weeks following disclosure of losses related to the sub-prime crisis in the US, rose 9.4 per cent on Tuesday.

Reliance Energy moved up by 13 per cent to Rs 1,300 even as the buyback of shares by the company at a price of Rs 1,600 commenced.