Sensex, Nifty recover in choppy trade

Mumbai, Aug 26: The 30-share Bombay Stock Exchange (BSE) Sensex rose 283.35 points or 2 per cent to settle higher at 14,424.87, while the National Stock Exchange (NSE) S&P CNX Nifty advanced 82.10 points or 1.99 per cent to settle at 4,190.15 last week, tracking recovering global indices and stabilising political situation in the capital.

'' Market nudged higher last week tracking recovery in Asian markets on speculation that the US Federal Reserve will cut benchmark rates sooner rather than later. But the domestic bourses underperformed its Asian peers due to fluid political situation in New Delhi, with prospects of mid-term polls looming large. World stock markets had fallen sharply in recent weeks as problems in the risky US subprime mortgage sector spread to other markets. However, by the end of last week, there were strong indications that the Congress leadership and the Left are moving towards a definite compromise,'' market analysts surmised.

The market surged on Monday, tracking recovery in Asian markets which were boosted by Federal Reserve' 50 basis-point cut in discount rate at which it lends to banks, on Friday, Aug 17.

However, the Indian market underperformed its Asian peers on that day due to political concerns. Left parties had asserted that a freeze on the forthcoming negotiations on India-specific safeguards at the International Atomic Energy Agency (IAEA) was a prerequisite for accepting the government's suggestion of setting up a panel to look into Left's concerns over the Indo-US nuclear deal. They had earlier warned the government on Saturday, Aug 18, of serious consequences if it pursues with a nuclear deal with the United States. The four Communist parties have 60 members of parliament (MPs) in the 545-member lower house of parliament. Prime Minister Manmohan Singh's government could fall or be reduced to a minority if the Left withdraws support.

Political uncertainty spooked the market on Tuesday, as the Sensex plunged 438 points in a broad-based sell-off. A host of small-cap and mid-cap stocks tumbled.

The barometer index bounced back on Wednesday, as mutual funds mopped up battered shares amid market talks that left parties may not withdraw support to the government. Firm global markets also supported domestic bourses.

Volatility gripped the market on Thursday, as the Sensex lost 84.68 points or 0.59 per cent to settle at 14,163.98. The market lost ground despite firm global bourses.

The Sensitive Index rebounded on Friday, as fears of immediate elections eased after India's biggest communist party, Communists Party of India (Marxists), or CPM, said after trading hours on Thursday, that it does not want to pull down the government over a nuclear deal with the United States.

'' Though CPM softened its stand on withdrawing support to the ruling coalition government at the Centre, it reiterated that the government should not go ahead with negotiations with the International Atomic Energy Agency and Nuclear Suppliers Group over a nuclear deal with the US,'' political observers noted.

The week's prominent leaders included Ambuja Cements, Bharti Airtel and Reliance Industries (RIL).

Last week, BSE said that it has decided to shift a total of 143 stocks to trade-to-trade segment with effect from Friday. The stocks transferred to trade-to-trade segment include Aurangabad Paper Mills, Bharat Fertilizer Industries, Eltrol, G.P. Electronics, G.R.Cables, Harig Crankshafts, HOV Services, Kilburn Engineering, LML, Nath Pulp&Paper Mills, SIEL, Trishakti Electronics&Industries, Bajaj Hindustan Sugar&Industries, Ion Exchange (India), among others.

SEBI said on Wednesday that it is considering a waiver of the entry load for direct applications received by asset management companies. Equity mutual funds charge entry load on one-time investments made directly or through distributors.

The government is committed to developing its nuclear energy capability and other sources of power as the country's own oil bill will impose an unbearable burden as growth continues, Prime Minister Manmohan Singh's said last week and urged all political parties to appreciate the vital interest of pursuing a sound energy security strategy.

India's wholesale price index rose 4.10 per cent in the week ended Aug 11, slightly up from the previous week's 4.05 per cent, due to higher food and manufactured product prices, official data showed last week.

UNI