No big hurdles seen in the way of bourses

Sensex has surged 1817.27 points from its low of 4505.16 on May 17, 2004, to Friday's close of 6322.76.

The equity market see no significant negative factors that could adversely impact it in the short term.

The earliest event that could have a bearing on the bourses is the forthcoming Union Budget, due in February 2005. But here too the outlines are very clear.

Markets sources said they expect no surprise in the North Block pronounceents as the Prime Minister and the Finance Minister have already made it clear that the Budget will focus on tax reforms.

Sharad Shukla, head of investment advisory services at IL&FS, said: "The pre-Budget rally is expected to be strong, backed by strong institutional inflows as the markets are still not richly valued. While there are a few structural negatives, they are getting ignored as the rally is driven by excess liquidity," he added.

Manish Shah, head of retail sales at Motilal Oswal Securities, said, "One always gets a feeling during a bull run that all negatives have been discounted. While crude oil prices are still a cause for concern, there is no other dampener around that can affect the fundamentals."

Shah said the fact that shares have risen even when oil prices were flaring up in the past few weeks indicates that we are in a bull phase.

Among sectors, information technology has been the star of the current rally, primarily due to foreign institutional investor interest in the very large capitalisation stocks in the sector.

"The rally in January -- when the Bombay Stock Exchange Sensex sniffed 6250 -- was more out of euphoria, but this time, the gain has been with consolidation," Shah added.

The Sensex has surged 1817.27 points or 40.47 per cent from its low of 4505.16 on May 17, 2004, to Friday's close of 6322.76.

Divyesh Shah, head of national sales at IndiaBulls, said, "In a bull run every thing is discounted and the correction is stock-specific. In the current bull run, even the higher oil prices have been totally discounted as the excess liquidity in the market is finding its way into equities."

According to Shah, cheaper valuations and the growth potential of Indian companies is drawing a new set of foreign funds.

The refrain in the street is that going forward, the high level of investor optimism could take the bourses only in one direction up.