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Markets recover from London shock — Sensex gains 67 points

Our Bureau

Mumbai , July 8

FINANCIAL markets put their worries behind them about the London blasts and bounced back to a `business-as usual' day on Friday. As US markets closed in the green on Thursday, it provided sentimental support to continued bullishness to Indian and other markets around the world. European markets, including London, have bounced back in this morning's trade.

Domestic bourses opened strongly with participants trying to cover up short positions from Thursday. Though there were concerns that Thursday's panic selling could set the trend for a larger corrections in the domestic bourses these were unfounded as indices remained in the green all day.

The Sensex ended trade with a 66.95-point gain at 7,212.08. The Nifty appreciated by 0.77 per cent and closed at 2,196.20.

Mid-cap stocks also posted a day of smart gains with the mid-cap index touching a new high. Overall, the CNX Midcap 200 rose by 1.62 per cent to close at 3,144.80.

In the currency market, the rupee marginally strengthened against the dollar as inflows from foreign institutional investors neutralised the effect of the spiralling price of oil and a weak euro. The rupee opened at 43.62/63 and touched an intra-day low of 43.64/6450. It closed the day at 43.61/62, up from Thursday's level of 43.64/65.

A dealer at a private bank said that with the price of crude touching $60.63 per barrel, there was some demand for dollars by oil importers. However, the rupee remained firm and ably supported by FII inflows, even as the euro and sterling weakened against the dollar.

According to data from the Securities and Exchange Board of India, FIIs were net buyers in the Indian market to the tune of Rs 405.90 crore on Thursday. They are expected to post positive figures for Friday's trade also, according to market participants. Mutual funds, however, were net sellers to the tune of Rs 103 crore on Thursday.

This week's trading in the markets was one of anticipating corrections that never came. Despite this continued optimism, with the benchmark indices staying strongly in the 7,100-plus region, analysts say that careful stock picking is the only safe investment strategy now. Valuations are stretched and liquidity and momentum based market movements can be volatile and fragile, an analyst said.

Gold prices soften

Abandoning Thursday's cautious stance, in Mumbai, gold reacted on Friday with some selling pressure from stockists. Standard gold fell Rs 60 from Thursday's close to end trade at Rs 6,055 per 10 g. On Thursday, the market experienced a bullish trend with prices going up by Rs 55 per 10 g after reports of the blasts in London. This trend reversed this morning as the prices in overseas markets also declined.

Traders said the market demonstrated a temporary reaction to terrorist attack in London, as gold spurted on aggressive buying as it is considered a safe haven during crises.

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