After a roller-coaster ride, the Sensex ended at 17,847.04 after hitting an all-time high of 17,953.07 in early afternoon trade. However, selling started soon and the index plunged by almost 600 points and hit a low of 17,288.41 during the mid-afternoon trade. The market started bouncing back again following renewed buying by foreign funds. The S&P CNX Nifty was up 141.85 points, or 2.8 per cent at 5,210.80, an all-time closing high.

Many market experts feel the rise has been too fast. “The uptrend in the Indian markets has been accelerated after the Fed rate cut. International investors have been on a rampage as is evident from the large FII numbers. However, the rise has been too fast,” said ING Investment Management CIO Paras Adenwala. Adenwala and other fund managers feel the sustenance of the sentiment depends on the coming quarterly results and the political environment.

“The Sensex surge is driven by liquidity provided by foreign investors. They have been pumping money into India. Some hedge funds, which lost money in the recent liquidity crisis are also said to be moving funds to India, and other emerging markets to recover their losses. This money is going to into top blue chip shares. They might pull out any time after making decent profits,” said BSE dealer Pawan Dharnidharka.

Said Religare Securities Ltd president (equity) Amitabh Chakraborty,”rumours of fund selling by the likes of Goldman were doing the rounds in the mid-trading session when the Sensex lost more than 600 points from the top, and fears of a much-awaited correction resurfaced. However, the correction was extremely short lived and the markets again covered almost the entire lost ground to close more than 500 points up on aggressive buying in RIL, REL, NTPC, Infosys and RCOM.”

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