Saturday, October 1 2005 11:08 Hrs (IST) - World Time -

Mumbai: Stocks: After a brief pause last week, the sensex once again began its record setting spree and scored the biggest weekly gains of 412 points in 68 months in highly volatile trade powered by ample liquidity and strong hopes of excellent second quarter corporate earnings.

The sensex whizzed past 8700 level for the time ever to hit a new intra-trade record high of 8722.17 before ending the session at an all-time closing peak of 8650.17 on Sept 29, 2005.

In the week to September 30, the Bombay Stock Exchange (BSE) Benchmark 30-share Index (sensex) witnessed wild swings in a range of 8722.17 and 8280.06 before ending the week at 8634.48 as against last weekend's close of 8222.59, a net rise of 411.89 points or 5.01 per cent.

This is the largest weekly rise in terms of points in more than five and half years. The sensex had gained by 619.97 points in a week between February 7 and 11, 2000.

The sensex also has recorded a sharp rise of 829 points in September, making it the second largest in a single month in the BSE history. It had flared up by 1454 points during March 1992, the big bull Harshad Mehta era.

The whopping rise of 2480 points or 40.30 per cent in the sensex during the last five months also is unprecedented.

Although strong liquidity and robust fundamentals as well as an extraordinary 8.1 per cent GDP growth in the April-June quarter visualised an extended price rally, now the market seemed to have entered into a consolidation phase after the expiry of Futures contract on September 29.

Another long bull phase is expected to emerge after announcements of second quarter working results by corporate from October 10 onwards even as the market is considered to be fully priced now, analysts said.

After a plunge in share prices in the preceding weekend, the market mainly derived its strength from the Government's initiative to bring stability on bourses and instil confidence among investors.

The Government not only justified the recent bull race in the last few months that lifted the sensex to dizzy heights, but also criticised media for misleading reports about a probe into the rapid price upsurge, which had created panic in the market last week.

Finance Minister P Chidamabram has said that the price earning ratio was well within comfort zone and there was no scam in the stock market while Prime Minister Manmohan Singh criticised media for misleading reports causing stocks crash.

Chidambaram also said that the stock market reflected the economic fundamentals and so far there was no manipulation reported in the stock market.

Renewed buying spree along with greater volatility in the week should be credited to expiry of derivatives contract.

Hedge funds and domestic mutual funds as well as operators and retail investors, which had gone short in the mayhem last week, covered these positions.

However, investors burnt their fingers in small-cap stocks, which encountered constant selling pressure following a crackdown by the Securities and Exchange Board of India (SEBI) after many of these counters reached abnormal heights in the preceding week.