Foreign funds lend momentum

STOCKS REPORT

The benchmark BSE Sensex raced to a record closing high on Thursday. The close above the 6300-mark was powered by improved foreign fund flows, tumbling crude oil prices and a global market optimism.

The index closed at 6328.43, up by 100.60 points after opening at 6275.41 and touching an intra-day high of 6335.14. The broader Nifty index closed up 36.95 points at 1999, which also is a record.

Gainers, at 1019, and losers, at 1005, were almost neck to neck in a rally with 23.4 crore shares changing hands. Dealers said that the selling pressure came from the domestic funds and retail investors.

Brokers pointed out that the current momentum is due to the inflows from the foreign investors. But the optimism was mixed with caution.

A dealer said: "We do not see the momentum continuing after December 15, when most of the foreign markets will be commencing their holiday and festive season."

Within the domestic economy, the receding of oil prices is a reason for the optimism. The US crude has now gone below $46 a barrel.

While from the export point of view, especially in the technology sector, appreciation of the rupee is a matter for concern.

Foreign funds have brought in a record $1.4 billion worth of Indian shares in November, compared with $876 million in October.

Shares of Indian Oil closed up 6.8 per cent at Rs 475.5 while Bharat Petroleum closed up eight per cent at Rs 431.4.

Reliance Industries rose 2.6 per cent to Rs 541.8.

Shares of auto stocks were also firm on expectations of better realisations. Maruti Udyog rose 4.4 per cent to Rs 425.95 and bus and truck maker Ashok Leyland gained 3.2 per cent to Rs 21.05.

Banks also rallied on higher loan interest rates. State Bank of India jumped 7.6 per cent to Rs 581.7 and Union Bank of India gained nearly eight per cent to close at Rs 104.55.

Prices of steel companies had risen during the day after the announcement by the steel minister that there would be a price regulator for the sector.

Steel Authority of India fell one per cent to Rs 55.55 but Tata Steel rose 0.95 per cent to close at Rs 330.9 after the company said on Wednesday that it would raise prices for its retail customers.