Taipei, May 15 (CNA) The local bourse recovered its early losses Tuesday to close in positive territory after bargain hunters turned active, picking up select large-cap high-tech stocks, dealers said.
However, market sentiment remained cautious about the financial crisis in the eurozone, in particular as political parties in debt-ridden Greece have been struggling to form a coalition government after the May 6 parliamentary elections, dealers said.
The weighted index closed up 18.46 points or 0.25 percent at 7,395.64 , after moving between 7,291.44 and 7,396.42. Turnover totaled NT$68.09 billion (US$2.31 billion) during the session.
The market opened down 0.85 percent and moved to the day's low as investors took cues from heavy losses on the European markets and a retreat on Wall Street overnight amid rising concerns over the debt problems in Europe, dealers said.
However, after the index fell below 7,300 points in early morning trade, bargain hunting emerged in some electronics heavyweights, such as cell phone camera lens supplier Largan Precision Industry Co. and smartphone vendor HTC Corp., pushing up share prices on the broadermarket by the end of the session, they said.
"These highly priced high-tech stocks attracted buying after a recent slump," Mega Securities analyst Alex Huang said.
"But I prefer to believe the gains were simply technical in nature since the global financial markets remain haunted by fears about the debt situation in Europe," he added, referring to an overnight spike in the CBOE Volatility (VIX) index, a fear gauge on Wall Street.
Among the winning high-tech stocks, Largan rose by the maximum daily increase of 7 percent to close at NT$497.50, and HTC gained 3.53 percent to end at NT$440.00.
Boosted by these heavyweights, the machinery and electronics sector scored the highest gains among the eight largest sectors of the market, finishing up 0.6 percent, ahead of the textile sector with a 0.4 percent increase and the plastics and chemical sector with a 0.2 percent rise.
Huang said the daily trading volume remained thin as many investors took to the sidelines, watching closely how Greece will deal with its political tensions and keeping an eye on the upcoming meeting between German Chancellor Angela Merkel and France's new leader Francois Hollande.
"Today's gains do not at all guarantee a further recovery in share prices,” Huang said. "With concerns over the European debt situation still lingering, the local market is likely to continue to trend lower over the next few sessions."
Bucking the uptrend, the cement sector fell 1.6 percent, foodstuffs shed 1.2 percent, and construction and financial stocks lost 0.8 percent, while the paper and pulp sector closed unchanged.
Hon Hai Precision Industry, the world's largest contract electronics maker, fell 1.73 percent to end at NT$85.40 after the company reported a record low gross margin for the first quarter of this year.
(By Frances Huang)