The Hindu Business Line : Market gains as mood turns optimistic — Sensex up 128 points but volumes remain low

DIWALI has brought cheer to the equity market with the Sensex rising almost 400 points over the last three trading sessions. Even the US Federal Reserve's interest rate hike of 25 basis points failed to dampen sentiment.

However, the rise in stock prices was on low volumes. The beginning of the new year had been on an optimistic note with stock prices firm on Tuesday's 75-minute Muhurat trading session, with a 52 point-rise in the Sensex. The opening had fared still stronger with the index up by more than 100 points.

On Wednesday, the Sensex rose 128.65 points (1.62 per cent) to close at 8072.75, while NSE's S&P CNX Nifty rose 32.3 points (1.35 per cent) to close at 2,419.05. But Wednesday's rise was on trading volumes that were lower than Monday's. Brokers attributed the low volume to the long-weekend when the market will be closed on Thursday and Friday.

"This is a pullback rally. Due to negative sentiment, there had been short-selling and those positions have now squared-off," Mr Ambarish Baliga, Vice-President, Karvy Stock Broking, said.

He said the rise on low volume betrayed less interest at higher levels. The rise in stock prices had begun from the last day of the previous last year, (Samvat), which ended on Monday with a rise of over 200 points in the Sensex and 50 points in NSE's Nifty.

The Sensex had increased from 6,000 to around 8,000 in the last year, a gain of more than 33 per cent, while the Nifty had increased by 28 per cent or 525 points. They were the highest gains in a single year for these indices.

Going forward, the overall market mood was seen as optimistic for the next one year, though there could be some downfall in the short term.

"Since last Diwali, we have seen the Sensex rise from 6,000 to 8,000, a gain of 33 per cent. From this level, expect 20-25 per cent gain till next Diwali," said Mr Arun Kejriwal of KRIS Research. However, he cautioned investors that there could be wild movements in between. Mr Baliga too was bullish for the next one year, but saw some fall from current levels in the short term.

"Overall outlook is positive with the BSE Sensex around 9,500-10,000 by next Diwali. But before that, there could be some selling, which may bring the Sensex to 7,500 levels," Mr Baliga added.

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