Double bull: a rally led by old & new

The bourses are on fire, but what happens down the road?

Both old and new economy stocks contributed in equal measure to the recent surge in the Bombay Stock Exchange (BSE) Sensex.

The last time the Sensex touched 6,000 levels, in January-February 2004, the rally was driven by old economy war horses in the steel sector.

In the bull run of 2000, new economy stocks such as Infosys, Satyam Computer, Zee Telefilms and MTNL had led the rally on the BSE.

The Sensex closed at a new 9-month high of 6,016.58 on Wednesday. It rose by 1511.42 points (33.5 per cent) from 4505.16 on May 17, 2004.

The main drivers for the recent rally were Infosys, Reliance Industries, ITC, Tata Steel, ICICI Bank, Larsen and Toubro, HDFC Bank, HDFC, Satyam Computer, ONGC, Wipro and Hindalco.

Infosys Technologies has been the biggest contributor to the Sensex tally this time around, adding 339 points to the Sensex' rise between May 17 and on Wednesday. The stock appreciated 83 per cent from Rs 1,131.76 on May 17, 2004, to Rs 2,072.80 on Wednesday, November 17.

The price has been adjusted for a 3:1 bonus issue. As a result, the weightage of stock in the Sensex on a free-float market capitalisation basis has increased from 9.42 per cent to 12.69 per cent.

Reliance Industries was the second-largest contributor to the Sensex' rise, adding 176 points, while ICICI Bank added 117 points.

During the period, the market price of Reliance Industries increased 35 per cent to Rs 543.85 (Rs 403.60) while that of ICICI Bank rose 40 per cent to Rs 334.95 (Rs 238.70).

The Tata Steel and ITC scrips added 95 points and 88 points, respectively to Sensex' climb. The Tata Steel scrip gained 77 per cent to Rs 310.05 (Rs 175.03), while ITC gained 37 per cent to Rs 1,135.55 (Rs 828).

HDFC Bank and Wipro added 70 points each. The HDFC Bank scrip has appreciated 69 per cent to Rs 482.45 (Rs 286.25) while Wipro gained 70 per cent to Rs 714.40 (Rs 420.61).

HDFC, ONGC, Satyam Computer Services and Hindalco each added more than 45 points to the Sensex in the last six months.

Other Sensex stocks posting more than a 25 per cent appreciation in value terms include Bharat Heavy Electrical (54 per cent), Reliance Energy (31 per cent), Cipla (26 per cent), Gujarat Ambuja Cement (29 per cent) and Zee Telefilms (28 per cent).

Maruti Udyog and Dr Reddy's Laboratories are the only losers in the last six months with the market price of Maruti Udyog declining by three per cent to Rs 388.35 (Rs 400) and Dr Reddy's Laboratories to Rs 785.50 (Rs 787.65).