Stock mkts stable at mid-session

Mumbai: The stock markets on Tuesday showed some stability after the initial high volatility, ruling around 10,400 levels during the mid-session on emergence of buying support and reduced margin pressure.

The market is in the process of consolidation at the prevailing levels with major part of outstanding positions cleared in the last three sessions, brokers said.

Analysts termed the unprecedented volatility in the market and the historic stocks crash in the last three days as cascading effect of margin calls.

They feel that the market is fundamentally strong and is expected to recover in the new contract of the Futures and Options (F&O).

Only a few brokers seemed to be engaged in liquidation of long outstanding positions built up in the F&O segment to escape margin calls as May contract expires on Thursday.

Meanwhile, the market regulator Securities and Exchange Board of India (SEBI) met heads of prominent mutual funds and stock exchange officials to discuss the market situation.

The Bombay Stock Exchange benchmark Sensex recouped to come out from initial losses to trade in positive zone in the first 30 minutes of trading as funds picked up heavy-weighted scrips on Tuesday.

The Sensex and Nifty after being in the red in the morning trade, showed signs of recovery.

Stocks from the capital goods sector and the metal sector have bounced back witnessing buying at the bourses.

Buying was also seen in oil & gas and IT stocks.

Stock brokers said massive purchases by domestic financial institutions in heavy-cap stocks and short-covering

in a few counters helped the 30-share Sensex to recover.

Institutional investors seemed to be supporting the market at lower levels.

FIIs and financial institutions were seen making heavy purchases when the stock market crashed in the initial ten minutes of trading.

Foreign Institutional Investors (FIIs) reported a net investment of Rs 1,914.57 crore on Monday while pulling out about Rs 872 crore from the Cash segment.

Mutual funds pumped in a massive Rs 2,933 crore during the last week, besides heavy purchases during the overnight mayhem on the bourses.

A few brokers, however, were believed to be engaged in liquidation of long outstanding positions built up in the Futures and Options segment to escape margin calls as May contract is coming to an end on May 25.