Analysts said that buying at lower levels, a late recovery in the Asian markets and a positive opening in European markets helped lift the investor sentiment in India.
The stock market turned highly volatile today with the benchmark index plunging back into the red after oscillating more than 1,600 points between negative and positive territories.
After plunging deep into red with an early morning loss of 558 points, the stock market staged a smart recovery and the Sensex wiped off all its morning losses by early afternoon.
However, the recovery was short—lived and the index again moved back into the red zone and was trading 250.27 points down at 16739.91 at 1345 hours.
The index had opened 472 points down this morning and the losses widened to 558 points within minutes. However, by the early afternoon, the index had recovered more than 700 points from its early morning lows.
By 1345 hours, the index had traversed over 1600 points between the negative and positive territories.
Experts said that the brief recovery was mostly due to positive opening in the European markets, which later pared their gains with the trend reflecting on Indian bourses also.
Within minutes of opening this morning, the Sensex had dipped to as low as 16,432 points —— its lowest since June 1, 2010, but it wiped off all its losses and had moved into positive territory soon after mid—day —— the time when European markets open.
After falling 1322 points in the past five trading session, the Sensex had opened very weak this morning with heavy selling in stocks like Reliance Industries, Infosys, ICICI Bank and TCS.
Another benchmark index Nifty was also oscillating between positive and negative zones after slipping below 5,000—point level earlier in morning. The Nifty was 71 points down at 5047.70 points at 1345 hrs after briefly trading in positive territory.
Stocks like TCS, Tata Steel, Tata Motors, Infosys and Wipro were seen deep in the losses, although ITC, HDFC and M&M were trading with gains in the BSE.
The overnight meltdown in the US markets and the continuing downtrend in Asia this morning had added to the woes of Indian bourses.
The global markets have been in a turmoil for past two days, after the creditworthiness of the US was downgraded by Standard and Poor’s amid the American economy’s mounting debt worries. The debt problems in Europe have already been hammering the stocks across the world for about a week now.