SUPERSONIC SENSEX FLIES INTO A CIRCUIT

BOMBAY SHOCK EXCHANGE

IT WAS a frenzy unprecedented in the history of the Indian stock market. Investors scrambled to buy stocks as if there was no tomorrow, almost certain that the emergence of a stable government at the Centre would solve all the ills dogging the economy. In the mad rush, circuit breakers on the upside were triggered, and trading had to be halted from 12 noon onwards. This is the first time that trading has been suspended after the upper circuit breakers were breached.
    "There is a tremendous pentup demand in the system, we could see some of it spilling over to tomorrow (Tuesday) also," said A Balasubramanian, chief investment officer, Birla Sun Life Mutual Fund.
    The 30-share Sensex ended the truncated session at 14,284.21, up 2,110.79 points, or 17.3%, over the previous close. The 50-share Nifty ended the session at 4,323.15, up 651.50 points, or 17.74%, over the previous close.
    Monday's spectacular rally has benefited only those who are already invested. Traded turnover on both exchanges combined was barely Rs 3,000 crore, indicating that few traders or investors got a chance to participate in the upswing. Foreign institutional investors managed to make net investment of just Rs 45 crore.
    Indications are that the market could rise further on Tuesday, but there will be profit-booking at higher levels, as brokers are advising their clients to take profits while they can.
    The rupee moved in sync with stocks, and posted its biggest single-day gain against the dollar in more than 11 years when it closed 3% higher at 47.88 on Monday. Gold, however, lost its sheen by Rs 385 and closed at Rs 14,440 per 10 gram in Mumbai.
    Interestingly, an ET snap poll of a dozen senior officials at leading broking and fund houses estimates the Sensex to be between 12,500 and 18,000 by the year-end. At least half a dozen respondents expect the Sensex to be at 14,000.
    There was some confusion early on, as the indices breached the first 10% circuit breaker without trading being halted. The Nifty had risen more than 14% and the Sensex close to 12% when trading was stopped a few minutes after 10. When trading resumed at 11:55 am, indices quickly shot past the next trigger levels (in terms of points) prompting exchanges to halt trading for the rest of the session.
    Nearly all market participants had expected the key indices to rise 8-10% in early trade following the UPA's convincing win in the recent elections. But only few had expected the gains to sustain till the end of the day. Given that the macrooutlook, both globally and locally, is far from rosy, brokers anticipated profitbooking at higher levels. What actually transpired stunned even the most die-hard of bulls.
DECODING CIRCUIT BREAKER
What is a circuit breaker?
A circuit breaker helps check abnormal movement in indices, and also stock manipulation. The breaker is applied in three stages of movement — 10%, 15% and 20% — either up or down.
How's the circuit limit fixed?
A circuit limit is fixed on the basis of the indices' closing values at the end of the previous quarter. Monday's limits were based on the closing values of the Sensex and the Nifty on March 31, 2009. A MINUTE IN HISTORY

• For the first time in Indian stock market history, trading suspended for hitting the UPPER CIRCUIT

• Only 845 companies were able to trade on BSE while the number on NSE was just 587
WILL THE MARKET AGAIN HIT THE CIRCUIT BREAKER ON TUESDAY
May hit the first 10% threshold, but likely to give up gains. Many investors will look to sell
HOW DID THE STOCK EXCHANGES REACT ON MONDAY
Confusion as indices overshot 10% mark before trading was halted. Broker margins hiked later to temper exuberance
WHAT FUND MANAGERS SAY
MFs are in a dilemma: stocks are expensive while booking profits will generate idle cash
HOW ARE SHORT-SELLERS HIT
Many operators and a few big broking houses which were short have been trapped by the sudden surge in prices

NIFTY TOUCHES 15% CIRCUIT WITHIN 60 SECONDS OF OPENING; TRADING SUSPENDED FOR TWO HOURS

TRADING RESUMES BUT SUSPENDED FOR THE REST OF THE DAY AFTER INDICES HIT 20% CIRCUIT

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