Sensex gathers tailwind to 13k

Strong global cues pull index up 198 points to 12,736.

Friday the 13th proved lucky for Dalal Street. The benchmark Bombay Stock Exchange (BSE) 30-share sensitive index, Sensex, scripted its fastest turnaround and a new record of 12,736.24 as bulls went on a rampage, sensing better corporate earnings.

The index took just 87 trading sessions to recapture the peak scaled on May 10, gaining 42 per cent from a low of 8,924.44 points on June 14. Before that, the Sensex had melted 30 per cent between May 11 and June 14.

In tandem with the Sensex, the rupee rose to a five-month high on Friday riding on foreign fund inflows into the bullish stock market and underpinned by falling oil prices. The rupee closed at Rs 45.41 a dollar, after touching its highest since May 19 at 45.40, up from yesterday's close of Rs 45.61.

The rupee has gained 3.6 per cent from a three-year low of Rs 47.04 in July. Dealers expect further appreciation of the Indian currency as exporters and foreign custodian banks have been selling dollars on behalf of their institutional clients expecting a further appreciation of the rupee.

Analysts expect this bull run, which has been restricted to information technology, banking and Reliance Industries so far, to spill over to mid-cap and small-cap stocks. Mid-cap and small-cap indices are, respectively, 10 and 18 per cent away from their peak levels.

The broader S&P CNX Nifty is still 78 points away from its peak of 3,754.25 points on May 10. The Nifty ended the day at 3,676.05 points, up 55 points from yesterday.

The market capitalisation of the Indian bourses now stands at Rs 33,04,332.01 crore, Rs 16,6803 crore away from the May 10 high of Rs 34,71125 crore. At this level, the price to earning (P/E) ratio of Sensex stocks stood at 22.62, marginally lower than the 22.71 recorded on May 10.

Riding high on hopes of robust second-quarter performance by blue chip companies and falling oil prices, the Sensex on Friday reached an intra-day high of 12,756.23 points, before closing at 12,736.24, a gain of 198.44 points, or 1.58 per cent.

In terms of market turnover, too, there is a clear distinction from the earlier peak on May 10.

While the total traded volume was Rs 47,236.01 crore on May 10, yesterday the turnover was lower by Rs 7,320.68 crore, or 18.3 per cent, at Rs 39,915.33 crore. The overall market breadth was negative on Friday, with 1,444 stocks ending lower than the previous close and 1,083 ending in the green.

Among the top stocks on Friday, Reliance Communications gained 6.32 per cent to Rs 367.80, followed by Infosys (3.34 per cent to Rs 2,088.65), HDFC Bank (3.11 per cent to Rs 988.70), BHEL (up 2.90 per cent to Rs 2,395) and HDFC (2.18 per cent to Rs 1,532.55).

Tata Steel was the biggest loser among the Sensex stocks at 1.01 per cent to Rs 511.30, followed by Bajaj Auto (down 0.83 per cent to Rs 3,121.45). "Interest rates are looking stable, corporate announcements are pretty robust and oil prices are down by almost 20 per cent. Investors are keen to invest in equities. But, at the same time, mid-and small-caps have not performed in line with the Sensex stocks. It is possible that after a span of time, these stocks could rally to a good extent," S Naganath, President and Chief Investment Officer, DSP Merrill Lynch Fund Managers, said.

A major driver for the market was the return of foreign institutional investors (FIIs). Since June 14, FIIs have pumped in Rs 11,971.90 crore into the market, according to the Securities and Exchange Board of India.

Except for banking and infotech indices, all other sectoral indices are trailing from their peaks posted on May 10. The biggest laggard is the BSE Metal Index, which is 22 per cent lower than the earlier peak. The IT index is now at an all-time high of 4797.04, which is 15 per cent higher than the May 10 level, while the banking index is 5 per cent higher at 6,106.53.