Stock market into buying frenzy; trading suspended for day

Mumbai, May 18 (PTI) Hailing the decisive mandate to the
Congress-led United Progressive Alliance (UPA), investors went
into a buying frenzy, resulting in an unprecedented surge in
the BSE Sensex, which rose by nearly 2,100 points and forced
the authorities to suspend trading for the day.

Trading was suspended for two hours within seconds of
opening of the market after the Bombay Stock Exchange (BSE)
surged by over 1,300 points and the authorities closed the
floor immediately after trading resumed at 1155 hours. The BSE
sensex closed 17 per cent higher at 14,272.63.

Echoing the sentiment, the National Stock Exchange (NSE)
index also rose by 20 per cent, prompting the authorities to
suspend trading for the day. In two bursts, the 50-share Nifty
rose over 712 points, a buoyancy that led to an all-round
appreciation in share prices, which marketmen say is the first
of its kind.

The BSE 30-share index zoomed to close at 14,272, up by
nearly 2,100 points. The NSE index surpassed all the three
upper limits of 10, 15 and 20 per cent, forcing the
authorities to suspend trading for the day.

With the UPA getting near a clear majority in the 15th
Lok Sabha (Lower House of Parliament), economic reforms are
set to get pace in all the sectors, a leading broker said.

The upsurge was strong enough as the NSE index Nifty
surpassed the first 10 per cent upper limit in just 13 seconds
after the opening and hit the second 15 per cent limit as
well, resulting in suspension of trading for two hours.

On resumption of trading, the Sensex hit the upper-most
limit of increase of 20 per cent, which forced the authorities
to suspend trading for the day to avoid any panic or
payment-related crisis.

Market participants were bullish because of the clear
verdict of the people in the Lok Sabha elections, giving a
clear majority to the ruling UPA, generating hopes that this
would escalate economic reforms without any disruption.

Commenting on the development, SMC Global Vice-President
Rajesh Jain said, "Markets have gone up today but the volume
of stocks getting traded was low, leading to a low turnover."

The rupee strengthening against the US dollar confirms
that the stock markets will go up in the near term as FIIs
would start buying."

Investors said the surge in the markets was expected but
the closure of the markets was so fast that most of the
participants failed to benefit from the rally.

The rupee and bonds rallied while gold fell as funds
pulled out money to invest in other better options.

Brokers said the jump in the indices triggered the first-
ever freeze in trading after the "circuit-breakers" came into
existence some 12 years ago.

The BSE Sensex had surged 26 per cent this year before
Monday's rise.

The nation’s benchmark stock index may surge as much as
20 per cent over the next week as overseas investors, who have
purchased Indian shares of up to USD 3 billion in a month, may
continue buying as they consider India to be the best among
emerging markets, said NSE broker Rajiv Malik.

He said buying was mainly in infrastructure and core
sector shares like cement and steel. PTI