Sensex jumps 567 pts; experts wary

The Sensex finally closed the day at 16,416 witnessing a big gain of 567.50 points,or 3.58 per cent.

Following the euphoria in the global markets after US Federal Reserve chairman Ben Bernankes assurance that policymakers will discuss in September to take necessary steps to support growth in the US,the benchmark Sensex of the Bombay Stock Exchange jumped by as much as 613 points in intra-day trade on Monday.

The Sensex finally closed the day at 16,416 witnessing a big gain of 567.50 points,or 3.58 per cent,but experts say that this is not a reversal of trend and investors should remain cautious. The broader Nifty at the National Stock Exchange rose by 171.8 points or 3.6 per cent to close at 4,919.6. While the rise in the Indian markets followed the gains of US markets on Friday and that of Asian markets earlier on Monday morning,the gains of Indian markets surpassed that of all other major markets in the world. As against the rise of around 3.6 per cent in the Indian markets,the Hang Seng in Hong Kong rose by 1.4 per cent while Nikkei in Japan was up 0.6 percent. Premier indices in Germany and France were up by 1.4 per cent and 1.8 per cent respectively.

Experts however cautioned investors on this jump. The Indian markets have been under-performing world markets for over a month and there were short positions built in the market. It was a technical bounce that was due, said Aseem Dhru,CEO,HDFC Securities. This does not indicate any new trend in the market and investors should remain cautious.

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Others,too,agree to this. The problems being faced globally have no short-term solutions and so this is not a reversal of trend. It was just a bounce back as the markets had fallen a lot and there may be some more bounces till Nifty hits 5,200 after which it may fall again, said Pankaj Pandey,head of research at ICICIdirect.com.

Even the foreign institutional investors were absent from this rally and according to the data released by the Securities and Exchange Board of India,the net outflow of FIIs stood at Rs 96.6 crore on Monday. Till Friday the Sensex had fallen by close to 13 per cent in the month of August itself amidst the concerns over likely recession in US and debt problems in various Europeans nations. At BSE,the rally was led by IT and metal indices that rose by 5.1 per cent and 4.6 per cent respectively. However it was a broad phenomenon at the markets with 437 advances against 59 declines among the BSE 500 stocks.

Within the Sensex,TCS emerged as the biggest gainer as its stock price rose by 7.3 per cent during the day. Among Nifty stocks,RCap rose 13.2 per cent.