Markets end in green despite grim global cues

: Indian equities markets Tuesday bucked an all-round global trend of a sea of red to end in the green despite grim global cues, surprising analysts.
The market opened very weak but after C.B. Bhave, chairman of the Indian market regulator Securities and Exchange Board of India (SEBI), assured investors in a hurriedly called press conference in capital New Delhi, markets appeared to recover and finished in the green.
The 30-share-sensitive index plunged by 442.20 points soon after opening to a near two-year low of 12,153.33 – a loss of 3.5 percent – amid heavy selling in stocks of banking, metal, realty and IT sectors.
By close of trading, however, the Sensex had recovered sufficiently to end at 12,860.43, up 264.68 points or 2.10 percent from its previous close Monday at 12,595.75. The broader-based 50 share S&P CNX NIFTY also showed a similar trend and closed at 3,938.75, up 88.7 points or 2.30 percent from its previous close Monday at 3,850.05.
With the US House of Representatives rejecting the $700 billion bailout plan Monday, markets all over the world crashed. The Dow Jones Industrial Average tracking the New York Stock Exchange dropped Monday by 777.68 points or 7 percent, its largest point-drop in history.
Markets in Europe too crashed Monday while those in Asia did so on Tuesday. Only the Indian market bucked the trend and behaved in a surprising manner, analysts said.
Analysts, however, remained sceptical about the impact that Bhave’s and later FM P. Chidambaram’s attempts to talk up markets had in propping up equities prices.
“The situation is extremely grim and there is absolutely no liquidity in the market with nobody lending to nobody in the inter-bank market,” said Jagannadham Thunuguntla, head of the capital markets arm of India’s fourth largest share brokerage firm, the Delhi-based SMC Group.
“For example, the London Interbank Offered Rate shot up to an all-time high of 6.33 percent Tuesday, an intra-day jump of nearly 4.5 percent which is just too high to imagine,” he said.
“There is no liquidity in the Indian system as well, so the only way you can explain the rise in the Indian markets is that there was short covering by short sellers,” he said.
“It is extremely surprising that the India markets gained despite the gravity of the situation,” he said.
Even Tuesday, one more European bank was bailed out when the Belgian, French and Luxemburg governments pumped in 6.4 billion euros or $9.2 billion into Dexia, the top player in Belgium and Luxemburg.