Sensex bounces back 703 points, but brokers wary

Realty stocks jump the most on DLF buyback announcement.

Hopes of political stability following negotiations between the United Progressive Alliance and the Samajwadi Party, bargain hunting by investors, short covering by bears and a sharp spurt in realty shares saw the Bombay Stock Exchange Sensitive Index bounce back from its 15-month low to register a thumping gain of 703 points.

Shares of DLF, the country's biggest property developer, jumped the most by 15 per cent to Rs 423.95 after the company announced it would consider buying back some shares to "protect shareholders' interest".

The Sensex closed at 13,664 "" a gain of 5.42 per cent. The broader index S&P CNX Nifty of the National Stock Exchange (NSE) was up 196 points, or 5.5 per cent, at 4,093. The Sensex has plunged more than 35 per cent from its record in January and India's overall market value yesterday slipped below $1 trillion for the first time in a year.

A rise in the European markets helped improve sentiment, traders said. In Europe, the key benchmark indices in France, Germany and the UK were up 0.57 to 1.41 per cent. India, however, bucked Asian trends with key indices in Hong Kong, Japan, Taiwan, South Korea and Singapore down 0.37 to 2.57 per cent. China's Shanghai Composite was flat.

The spectacular rise in share prices, however, wasn't enough to impress leading market players. Divyesh Shah, chief executive officer at Indiabulls Securities, said today's rally was mainly due to short covering but recommended waiting a couple of more trading sessions. "If top fund houses show some buying aggression, there could be a decent upside from here," he said. 
 

Top 5 BSE sectoral gainers
Sector	Jul 02	% Chg*
Realty	4731.19	12.22
Bankex	5919.63	6.02
Metal	13239.02	5.96
Cap. goods	10318.14	5.89
IT	4177.75	5.77
Top 5 sensex gainers
Name	Jul 02	% Chg*
DLF	423.95	15.08
Reliance Infra	790.50	12.60
HDFC	2039.20	11.10
ONGC	854.45	8.12
L & T	2297.15	7.33

Proprietary traders, or those who buy on their own accounts, were the top buyers today in the cash segment. According to the provisional figures available on BSE, proprietary traders brought stocks worth Rs 119.61 crore.

The BSE realty index was up 12.22 per cent as other stocks in the company, including Unitech, Indiabulls Real Estate, Shoba Developers, Parsvnath Developers and Akruti City among others rose between 5 and 20 per cent. A majority of the realty shares had slumped to their life-time lows as rising interest rates triggered concerns of higher land costs and fewer buyers.