FII inflows cross $10 bn in 2005

Sensex up 110 points to 9,394; Ranbaxy tumbles.

With FII investments in 2005 breaching the $10-billion (Rs 44,385 crore) mark, stock markets touched a new high today. The Sensex gained 109.81 points or 1.18 per cent to close at 9,394.27.

The FII inflow crossed the magic figure of $10 billion following an ICICI Bank public issue allotment. Of the Rs 5,000-crore domestic issue, nearly Rs 1,500 crore, or $325 million, have been allotted to FIIs.

The final figure for 2005 can still be higher as FII inflows continue to pour in. Merrill Lynch's India-dedicated fund in Japan, which has already collected $750 million, is likely to flow in any time. A couple of more India-dedicated funds are pending and that may add more to the kitty.

Despite the upbeat market, pharmaceutical major Ranbaxy Laboratories was down sharply (6 per cent) after the company lost the Lipitor case against Pfizer in a US court.

Even though the market breadth was positive with advances outnumbering declines 1.1:1, trading volumes were markedly lower than Friday's, particularly in the derivatives segment.

Cash market volumes were down 4 per cent while combined derivatives volumes on the top two bourses were down 13 per cent. As the year-end approached, trading volumes could slow down further, dealers said.

The Nifty closed at 2,842.60, up 32.45 points or 1.15 per cent. Of the 30 shares constituting the Sensex, 25 rose and 5 fell.

Hindalco was the star performer with gains of 4 per cent, with aluminium prices heading higher. Other frontline counters in the limelight were Hindustan Lever, ACC, Tata Steel, Wipro and Bharat Electronics "" all of which gained over 3 per cent.

Dealers said net buying by FIIs on Friday was $587 million.

Domestic mutual funds, despite being net buyers to the tune of Rs 13,074 crore this year, have been net sellers this month with outflows totalling Rs 1600 crore.

"Domestic fund managers seem to be going a bit slow on buying, probably because they are more price conscious. Foreign investors seem to be more forthcoming at these levels," said a dealer with a foreign broking firm.

Collections in equity funds continue to be strong which points to more buying from domestic fund managers, sooner than later. The recently launched Franklin Templeton Small Companies Fund mobilised about Rs 1200 crore.

Expectations of high economic growth and an anticipation of more foreign money entering Indian equities are keeping the mood upbeat. Even as broking firms have been crying hoarse about expensive stock valuations, scrips have continued to defy gravity. Still, solid response to India-dedicated funds in Japan and an inflow of petro-dollars are keeping markets pepped up.

Technical analysts do not see any danger signals for now though intermittent corrections are not ruled out. "There is still enough liquidity in the system that is taking the markets higher. However, since volatility is not ruled out at these levels, we recommend using a selective valuation-based approach and advise caution," said a dealer with a retail broking firm.