No stopping Sensex; up 101 to new high

Blue-chips see strong FII buying.

A fall in global crude oil prices buoyed sentiment in the equity market, and strong foreign institutional buying in select blue chips, particularly in the banking and oil sectors, pulled up the Bombay Stock Exchange Sensex to yet another record high.

Following the US markets, almost all Asian markets closed at multi-month highs. The Dow Jones Industrials index had closed at a nine-month high yesterday.

Leading marketmen expect the benchmark index to climb higher. DSP Merrill Lynch Chairman Hemendra Kothari said: "India is in a structural bull phase.

Intermediate corrections notwithstanding, we believe strong growth, coupled with globally competitive corporates and attractive valuations, will continue to lead the markets higher.

With today's 100-point surge, from yesterday's close of 6,227.83 to today's 6,328.43, the Sensex hit an all-time closing high. What is more, the Sensex today notched up yet another record "" an all-time intra day high of 6,335.14.

Strikingly, too, seven bank stocks hit their all-time highs on the Bombay Stock Exchange. Broker attributed today's surge to portfolio investors picking value in frontline stocks. Vallabh Bhanshali, director, Enam Financial Consultants said: "This is the first phase of India discovery but Indians will also discover the challenges of growth in a globalised market. Going forward, investors must look to distinguish between a strong economy and strong companies."

Reflecting the global appetite for fundamentally strong companies, foreign institutional investors continued to buy aggressively. Dominic Price, managing director and senior country officer for India at JP Morgan, explained, "The unprecedented levels of FII interest is a clear illustration of confidence in the government's ability to provide a stable platform for India's resurgence."

Uday Kotak, vice-chairman and managing director at Kotak Mahindra Bank, said: "The Indian elephant is finally on the move. The steps may be slower but are certainly more decisive. The Indian capital markets have the ability to be the largest and most efficient in the world after the US in the next few years."

Among index stocks, the Hindustan Petroleum Corporation scrip was the biggest gainer, closing almost 8 per cent (Rs 27.25) higher at Rs 370.15.

Brokers reckoned domestic refineries should benefit from the low crude prices as they will not pass on the full benefits of the cuts. The Union government refrained from cutting the prices of petrol and diesel on December 1, despite lower crude oil prices in the previous fortnight.

The State Bank of India and the HDFC scrips surged, 7.60 per cent (Rs 41.10) and 4.50 per cent (Rs 34.60), respectively, on optimism that the recent hikes in lending rates will translate into banks' profitability in the second half of the current year. The ICICI Bank scrip gained 1.12 per cent to Rs 343.70 at close, and HDFC Bank gained 0.76 per cent to Rs 488.20.

The Zee Telefilms scrip was the third largest gainer in the Sensex basket, rallying on news that the government had allowed cable operators to hike subscription rates.

But investors took the opportunity to book profits in information technology counters which have seen a strong rally last week. Of the 30 scrips in the Sensex basket, only four closed with losses. Losers included Wipro, Satyam Computer and Infosys Technologies.