Friday, April 8, 2011

Market outlook bullish despite Sensex plunge

MUMBAI: The BSE's benchmark index Sensex eased 0.1% on Thursday, dropping for a third day as investors took a breather after a steep rise in March, but robust foreign fund inflows affirmed a bullish undertone . Small- and mid-cap stocks climbed as they tried to catch up with the rally in the large-caps last month, and this helped gainers beat losers in the ratio of 1.9 to 1 in the broader market.

Energy explorer Cairn India fell 2% after approval for Vedanta Resources' deal to buy majority stake in the unit of Cairn Energy for about $9.6 billion was further delayed. On Wednesday, the government deferred a decision on the deal by referring it to the Group of Ministers for further review, and Cairn Energy and Vedanta on Thursday also extended the deadline. The 30-share index closed down 0.11%, or 21.02 points, at 19,591.18, with 17 of its components losing ground.

The smallcap and the mid-cap rose 1.25% and nearly 1%, respectively. Around 329 million shares were traded on the BSE , better than the 30-day daily average volume of 292 million shares. "It is just a pause after the rally we saw," said Rakesh Rawal , head of private wealth management at broking firm Anand Rathi . "Looking at the inflows we have had off late, the probability of a strong upside is much more than a downside ."

The benchmark index had rallied 9.1% in March, notching its biggest gain in six months. Foreign funds have pumped around $2.8 billion into equities since the start of March, after being net sellers in the first two months, on hopes a market correction made the market attractive given economic growth was still robust.

Maruti Suzuki dropped 1.2% after the top car maker said late on Wednesday it would recall 13,157 diesel engine cars. The 50-share NSE index Nifty dropped 0.1% to 5885.70 points. 

Source : ET

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