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Sensex witness strong rally, up 344 points

A rush of buying catapulted Sensex to 12,217.81, up by 344.08 points, the biggest single-day rise in two years.

india Updated: May 17, 2006 17:26 IST

A rush of buying prompted by recovery in global metal prices and Asian markets catapulted the Bombay Stock Exchange benchmark index to 12,217.81, up 344.08 points -- the biggest single-day rise in two years.

The Sensex started strong with a wide gap of 89 points at 11,962.87 and gradually moved upwards to the intra-day high of 12,238.81 before ending the day at 12,217.81, up by 344.08 points or 2.9 per cent.

Previously, the BSE 30-share index (Sensex) had zoomed by a huge 371.86 points on May 18, 2004.

The National Stock Exchange's (NSE) S&P CNX Nifty also flared up by 111.80 points or 3.17 per cent to 3,635.10 from previous close of 3,523.30. It had touched an intra-day high of 3,641.85.

In Asian markets, Tokyo's Nikkei was up by 149.25 points.

Despite negative FII activity, mutual funds and financial institutions continued their intervention in the market by placing fresh buy orders across-the-spectrum.

Institutional purchases were so extensive that these even covered small-cap and mid-cap counters, forcing operators and retail investors to join the bandwagon.

The sentiment was also boosted by the passage of Reserve Bank of India (amendment) bill 2005.

Bank stocks hogged the limelight at the fag end of the session following the amendment of the RBI bill, considered to be beneficial for public sector banks.

Some leading foreign funds, however, were of the opinion that presently the market is overvalued and needs a 20 to 30 per cent correction. Templeton Asset Management and JP Morgan Stanley opined that another 10 to 20 per cent correction will make market more attractive.

First Published: May 17, 2006 10:41 IST