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SCMP Reporter

THE market showed positive signs of a healthy return to form yesterday by putting on a further 261.32 points to close at 9,738.09.

  The uncertainty created by weak volume was washed away yesterday with $5.92 billion traded, reflecting the buoyant mood.

  The high volume indicates that more investors have taken a positive view on the market and bought accordingly.

  Turnover was 1.19 billion shares traded in 46,562 deals.

  Brokers said that today would be a critical make or break day as the index balanced on the 9,800 level. If the market was able to push on through that mark it had a very good chance of establishing itself above the 10,000 level.

  However, a reversal today would dent market confidence and trading would slide again.

  Among the buyers were Japanese institutions, who have been absent for some time.

  A senior Japanese broker said he expected his clients to put some funds back into the Hong Kong market in the new Japanese financial year, which started this month.

  Peregrine regional research director Anthony Bellingan said that if this rally picked up pace and volumes improved it could have a fair way to run before external worries, such as interest rate fears, held it up.

  ''The market is trading with good fundamentals but lacking the fuel of liquidity to see it take off,'' he said.

  One factor that may adversely affect the market is the announcement of US CPI figures for March.

  If it becomes apparent that the US recovery is not only under way but that it is going faster than most thought possible, speculators think the Fed may increase the interest rate sooner than expected.

  The March inflation figures will provide the market with a good measure on just how much growth induced inflation there is in the United States, and the probability of an interest rate rise.

  Yesterday saw the bulls get the better of the bears, but not without some nervousness in the market.

  The index gradually moved higher to close near the high of the day, but the most important feature of yesterday's action was the sudden sell-off when the index passed the 9,800 mark just after 2.30 pm.

  Nervous traders beat a hasty retreat when they realised their enthusiasm had got the better of them and stood back to watch the index retreat 100 points to 9,700 just before closing.

  Trading moved in a 280-point range from a low of 9,522.86 to a high of 9,802.46.

  From a bearish start the futures market also pulled ahead, at one stage trading at a 100-point premium to the cash market, before closing at 9,830.

  Volume was also improved with a total of 13,902 contracts traded.

  HSBC was the prime mover behind the rise, reflecting a degree of futures arbitrage activity.

  The bank is always a good barometer for market sentiment, and yesterday's $2.50 gain to $93 was a bold step forward.

  Now that it has established itself above $90, many retail investors will be wondering when it will go back past $100 again.

  If the rally continues today, the bank will be the main beneficiary.

  Hongkong Telecom moved up 50 cents to $14, which was to be expected as it missed out on the rally on Monday.

  Hutchison Whampoa surged $1.25 ahead to $34.75, while Cheung Kong gained 75 cents to $42.

  CITIC Pacific was left out of the rally, dropping 30 cents to $24.20.

  Jardine Matheson and Jardine Strategic are starting to look respectable again as the shock of the de-listing move wears off and fund managers have unloaded their holdings.

  Jardine Matheson put on $1.50 to $56.50 and Jardine Strategic added $1.70 to $30.50.

  China Light & Power was one of the brightest blue chips yesterday surging $1.50 to $43.



Trading revives as bulls await promising CPI