Sensex sprints to 8,800 intra-day

The market scaled another peak on Tuesday and closed just a fraction short of 8,800.

Steady fund flows from domestic and foreign institutions and expectations of good quarterly results are keeping spirits high on the bourses, according to dealers.

The Sensex gained 102.31 points to close at 8,799.96, off a peak of 8,808.83. The 50 stock Nifty gained 1.27 per cent to 2,663.35 points.

Unlike last week, the rally was broadbased with several small- and mid-cap stocks witnessing a turnaround.

"Tech stocks are looking up on expectations of robust second-quarter numbers. Markets are also expecting an upward revision in the earnings guidance by these firms," said a dealer.

Infosys, which is likely to declare its quarterly numbers on October 11, gained nearly 3 per cent to touch Rs 2,629 and Wipro rose more than 5 per cent to Rs 400.

Among the automobile majors, Tata Motors gained nearly 3 per cent to Rs 569, while Hero Honda Motors rose 2.6 per cent to Rs 768.

In Tuesday's trade, advances outnumbered declines 70:30. Among the smaller stocks, 404 were locked in the upper end of the circuit, while 239 were locked at the lower end.

The BSE Small-Cap Index gained 1.50 per cent. Among the key indices, BSE PSU showed strength with a gain of 1.25 per cent. Among the prominent gainers were tech firms, which are expected to gain from a weaker rupee, and automobile stocks, which are expected to clock higher sales in the upcoming festive season.

Expectations are that the infotech, engineering and construction sectors will show strong growth in the second quarter. Banks may show mixed results while oil is set to disappoint as oil marketing companies continue to bleed due to under-recoveries.

According to analysts, the Sensex earnings are expected to rise around 20 per cent this quarter. While market experts have been waving caution flags for quite some time now, the markets have been defying gravity, ignoring several negatives like oil prices and rising interest rates.

According to domestic broking firm SSKI, while the economy""and hence the market""remains on a structural upswing, one cannot lose sight of the not-so-inexpensive valuations in the short term.

Meanwhile, rising interest rates and oil prices introduce an element of risk to the earnings trajectory.

Currently, the Sensex trades at a P/E of 16 times FY06 earnings, which is at the higher end of the historic average multiple. However, foreign fund buying keeping up the market momentum.

This year till date, the Sensex has gained 33 per cent outpacing all major Asian markets baring South Korea driven by liquidity.