The Hindu Business Line : Markets recover after a 918-point intra-day fall

Mumbai, Jan. 28 The stock markets fell on Monday but their descent was cushioned by short covering and also expectations that refunds from the recent IPOs would happen soon to ease the prevailing liquidity problems.

The Sensex had, by mid-session slumped 5 per cent, tailing the downward trend in the Asian markets.

But it staged a sharp recovery of 710 points after a 918.37 points intra-day fall, which took it to a low of 17,443.29.

By noon, there was talk in the market about refunds from the recent IPOs (Reliance Power and Future Capital) being just around the corner. This led to a sharp pullback in the afternoon, market intermediaries said.

(Merchant banking sources said refunds of Rs 16,000 crore would come from the Future Capital Holdings IPO. The company itself said refunds would start from Tuesday.)

But the darker global sentiment still weighed heavily on the market; the Sensex finally closed 208 points down, lower by 1.14 per cent from Friday; the Nifty closed at 5,274, losing 2.03 per cent.

Mr Sanjay Prakash, CEO, HSBC Asset Management Company, said the market recovered after the huge fall because of “short covering of positions.”

Foreign investors, who were net buyers on Friday, were net sellers for Rs 1,038 crore as per the NSE and BSE Composite data.

(On Friday, FIIs had bought equity worth Rs 669.10 crore, said SEBI data.) Domestic institutional investors were net buyers for Rs 557.34 crore.

Some were optimistic about the RBI cutting interest rates and that too did lift the market a little, leading to the rate-sensitive stocks faring better on the bourses.

The BSE Bankex gained 1.24 per cent, and Auto 1.72 per cent.