FIIs turn net buyers again, lift Sensex

Stock markets continued to be on a roll on Thursday with the BSE Sensex and Nifty closing the day at their all-time highs. The Sensex closed up 73.97 points (1.04 per cent) at 7,193.85 after touching an intra-day high of 7,218.28. The Nifty gained 28.95 points (1.32 per cent) at 2,220.6.

With that, the total value of investor wealth on the Mumbai Stock Exchange stands at an unprecedented Rs 18,56,216 crore. Good buying interest from foreign funds and short-covering by traders lifted markets to a new high, dealers said.

According to data released by Sebi, FIIs once again turned net buyers in the equity markets during June after being net sellers in last two months. FIIs purchased a net $1.135 billion equity shares in June against net sales of $261 million in May and $150 million in April.

So far in the first six months of the current calendar year, FIIs bought a net $4.452 billion, 26 per cent more than $3.526 billion in the previous calendar year.

FIIs had bought $8.519 billion equity shares from the Indian stock markets in 2004.

While fund flows to emerging market remains positive, foreign funds are looking at the Indian market as a preferred destination. In June, 22 new FIIs registered with Sebi, recording the highest in the past one year.

In the first six months of the calendar year, 92 new FIIs registered with Sebi compared to a total of 120 for the whole of calendar 2004.

Meanwhile, the emerging market equity funds across the globe registered $239.1 million of inflows during the week, increasing year to date total inflows to $3.25 billion, according to Emerging Portfolio Fund Research (EPFR). This is way above the last year's total inflows of $2.78 billion.

Thursday's market rally was largely driven by large-cap stocks. Among the big gainers in frontline stocks were HDFC Bank (5.26 per cent), Satyam Computer (3.79 per cent), HDFC (3.79 per cent), ONGC (2.66 per cent), ITC (2.16 per cent) to Rs 1649.40, Dr Reddy's Labs (1.68 per cent). Despite the government dilly-dallying on BHEL, the stock was up 1.54 per cent.

Meanwhile, Reliance group stocks took a breather with the flag-ship Reliance Industries losing 0.03 per cent to Rs 641.9.

Currently, the Sensex trades at a price-earnings ratio of 16.03. Experts say, Indian equities look fairly valued at current level given that corporate earnings are likely to grow in the range of 15-28 per cent in fiscal 06.

While liquidity remains the key driver of market sentiment, "stock markets may be more vulnerable to earnings disappointments since growth expectations are already running high," said a market analyst.