Sensex now 150 pts short of 17K

New milestones for benchmark stock indices are in sight after domestic stocks soared for the fifth straight session today on strong inflows by foreign investments.

Expectations of a lower interest rate regime after HDFC and ICICI Bank cut interest rates on fresh loans propelled interest rate sensitive sectors such as banking and auto stocks.

The Sensex touched 16,845.83 "" just 154.17 points away from the 17,000-mark. The broader index Nifty advanced 94.65 points, or 1.96 per cent, to close at 4,932.20 "" mere 67.8 points away from the 5,000-mark milestone.

With today's gain, the Sensex has shot up by 3,000 points in one month, mostly powered by foreign institutional investor (FII) buying. FIIs bought over $1.2 billion worth stocks from the secondary market after the US Federal Reserve cut interest rates by 50 basis points.

The FIIs were net buyers to the tune of Rs.1,190.53 crore today, making their total net investments since the US Federal Reserve cut in interest rates (last four trading sessions) to Rs 6,037 crore ($1.5 billion). Domestic institutions booked profits today, and were net sellers of Rs.670.44 crore.

Two stocks which account for a fifth of the Sensex weighting "" Reliance Industries (up 3.6 per cent to Rs 2,356.70) and ICICI Bank (up 3.2 per cent to Rs 995.85) "" led the rally today as the Sensex rose 281.60 points, or 1.70 per cent today.

Said Ramdeo Agarwal, managing director of Motilal Oswal Securities: "Although we had kept a year-end target of 17,000 points the markets seem to be sprinting towards it. It is mainly the impact of global inflow and the falling interest rates."

Total market-wide turnover touched a record high of Rs 1,05,929.1 crore. The Futures & Option (F&O) open interest also touched a high of Rs 1.02 lakh crore, indicating continued bullish sentiments.

"Slowly, the market is getting into euphoric phase, which is very worrisome. We expect the market to be volatile ahead of the F&O rollover this Thursday," said Pankaj Namdharani of SPA Securities.

Top gainers among the Sensex was Reliance Energy, up 8.33 percent at Rs.1,093.70.

The country's largest car maker Maruti Udyog shot up by 5.45 percent at Rs.980.20.

The Foreign Investment Promotion Board (FIPB) cleared Maruti's proposal to form a joint venture for setting up an exhaust parts manufacturing facility in Haryana with Japan's Futaba Industrial Company. Futaba will hold 51 per cent in the venture.

Other top gainers included NTPC, up 4.83 per cent at Rs 196.55 and Larsen & Toubro, up 4.09 per cent at Rs 2,896.85. Among banking sector stocks HDFC Bank was up 1.78 per cent at Rs 1,346.25. Reliance Petroleum Ltd. was the top gainer among NSE 50 stocks ""up 8.03 per cent to Rs 167.40.

In the BSE sector-specific indices BSE Oil & Gas was the top gainer up 3.33 per cent to close at 9,651.17 points. Other gainers were BSE Bankex, up 2.54 per cent at 8,961.49 points and BSE PSU, up 2.30 percent at 7,959.92 points.

Among the top losers were IT stocks. Infosys was down 3.22 percent to Rs.1,763.25, Satyam Computers fell 2.32 percent at Rs.409.15, and TCS was down 0.89 percent at Rs.1,005.95.

The market breadth, however, was negative indicating the rally was confined to selected index weighted stocks. About 52 per cent or 1,474 stocks declined against the advances of 46 percent or 1,305 stocks.