The trading on the BSE and NSE was halted for the full day as the markets hit the 20 per cent circuit breaker after they reopened at 11:55 am. The Sensex zoomed 2,110 points to 14,284 while the Nifty touched 4,323, up 651 points. This is for the first time that trading was halted for the full day on the BSE and the NSE and also the biggest over single-day gains.
The near-decisive mandate for the UPA in the polls brought cheers on the Dalal Street, with investors hoping for a stable government that would take more steps to restore the India growth story again.
The markets had hit the upper circuit within minutes after opening and then trade had to be halted for two hours till 11:55 am. And when trading resumed again, it hit the circuit breaker again.
On the sectoral indices front, the BSE realty index jumped 15.8 per cent and the BSE bankex rose 13.6 per cent. The BSE capital goods index and the BSE metal index surged over 12.3 per cent each. The oil & gas index on the BSE advanced 11.9 per cent.
Raamdeo Agrawal, director at Motilal Oswal Securities, said that Indian markets are poised to move up sharply and it is time to get back to investing aggressively into markets.
Meanwhile, Morgan Stanley raised its 2009 Sensex target to 15,300, after a near-decisive mandate for the UPA. It also raised GDP forecast and earnings growth of Sensex companies.
Among the Sensex stocks, BHEL rose 32 per cent to Rs 2,266 and L&T advanced 29.5 per cent to Rs 1280.00. DLF and ICICI Bank also jumped over 25 per cent each. Reliance Industries also surged over 20 per cent.
Shankar Sharma, director at First Global, said it is important to book profits after the sharp rally.
The other stocks that saw whopping gains were IBREL and IVRCL Infra. The counters jumped more than 38 per cent each.
The BSE implements on a quarterly basis the index based market wide circuit breaker system, which is applicable at three stages of the index movement either way at 10 per cent, 15 per cent and 20 per cent. This circuit breaker brings about a coordinated trading halt in all equity and equity derivative markets nationwide.
The market wide circuit breakers would be triggered by movement of either Sensex or the NSE S&P CNX Nifty whichever is breached earlier.
In case of a 10% movement of either of these indices, there would be a 1-hour market halt if the movement takes place before 1 p.m. In case the movement takes place at or after 1 p.m. but before 2.30 p.m. there will be a trading halt for 1½ hour. In case the movement takes place at or after 2.30 p.m. there will be no trading halt at the 10% level and the market will continue trading.
In case of a 15% movement of either index, there will be a 2-hour market halt if the movement takes place before 1 p.m. If the 15% trigger is reached on or after 1 p.m. but before 2 p.m., there will be a 1 hour halt. If the 15% trigger is reached on or after 2 p.m. the trading will halt for the remainder of the day.
In case of a 20% movement of the index, the trading will be halted for the remainder of the day.
The percentages are calculated on the closing index value of the quarter. These percentages are translated into absolute points of index variations (rounded off to the nearest 25 points in case of Sensex). At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter.
On March 31, 2009, the last trading day of the quarter, Sensex closed at 9708.50 points. The absolute points of Sensex variation (over the previous day's closing Sensex) which would trigger market wide circuit breaker for any day in the quarter between 1st April 2009 and 30th June 2009 would be as under
Percentage (+/-) Equivalent Points (+/-)
10% 975
15% 1450
20% 1950