The Bombay Stock Exchange Sensitive Index surged past 17,000 points after 16 months on hopes that quarterly earnings due from next week would be better than the Street’s initial expectations as advance tax payments indicated robust profits.
Sentiment was also boosted by firm trends in Asian and European markets. The relatively strong debut of the Oil India Ltd (OIL) scrip added to the overall feel-good mood. The stock listed at a 4.38 per cent premium on the National Stock Exchange (NSE) at Rs 1,096 against the issue price of Rs 1,050. The stock gained during the day and closed 8.09 per cent higher to the listing price.
The Sensex started on a sedate note, but climbed 1.63 per cent or 273.93 points, to 17,126.84. It touched an intra-day high of 17,142.52 and an intra-day low of 16,868.46.
The Nifty closed up 77.10 points or 1.54 per cent at 5083.95.
Helped by soaring foreign portfolio inflows, the Sensex logged its third consecutive quarterly gain, rising 18.2 per cent in the September quarter — the longest run of quarterly gains since end-2007 and following a 49 per cent jump in the June quarter. It rose 9.3 per cent in the month.
Most market players were bullish in their outlook. They said the direction for the market, at least in the short term, was clearly up and there was visibility in terms of earnings which was adding to confidence. Vaibhav Sanghavi, a director at Ambit Capital, said the risk appetite of investors has increased and they were more confident now. “The markets are in a bull run for a long period,” he said.
Some others however weren’t that upbeat. D D Sharma, Senior Vice President - Research, Anand Rathi Financial Services, said though the Nifty crossed the major resistance level of 5,045, the uncomfortable part was that volumes were not heavy and the Nifty futures were at a discount.
| FAST TRACK RECOVERY | ||
| No trading days | ||
| Session I | Session II | |
| 8k to 9k | 63 | 7 |
| 9k to 10k | 40 | 5 |
| 10k to 11k | 32 | 10 |
| 11k to 12k | 15 | 11 |
| 12k to 13k | 135 | 10* |
| 13k to 14k | 45 | |
| 14k to 15k | 126 | 13 |
| 15k to 16k | 51 | 67 |
| 16k to 17k | 5 | 15 |
| Total | 512 | 138 |
| Session i ( Sep 2005-Oct 2007) Session ii (Mar 2009-Sep 2009) * The Sensex jumped from 12k to 14k without touching 13k | ||
Ravi Kapoor, Managing Director, Head of South Asia Capital Markets Origination, Citi, said although there were no negative triggers on the horizon, valuations were “looking a bit toppish” and the outlook was that of cautious optimism. Most foreign institutional investors (FIIs) were overweight on India and the flow of liquidity might further drive valuations upwards.
In the broader market today, 1,611 gainers were ahead of 1,215 losers on above- average volume of 480.2 million shares. Today, most sectoral indices were in the green with the bankex (3.69 per cent) and auto (2.13 per cent) leading the pack. The FMCG index was the only loser, slipping 0.42 per cent.
The market breadth was positive. Out of 2,858 shares traded, 1,598 advanced and 1,183 declined on the BSE.
State Bank of India surged 5 per cent to Rs 2,195.70 after the finance ministry said India had finally begun to recover from the recession, as can be seen from higher corporate tax revenues. ICICI Bank, Sterlite and Wipro rose 4.63 per cent, 3.46 per cent and 3.30 per cent, respectively. Auto stocks, Maruti Suzuki and Mahindra & Mahindra added 3.70 per cent and 3.46 per cent respectively.
“Oil India remains a favourite for long term, say, two-year investments. But for short-term trades, it is fully priced”, said Manish Sonthalia, Portfolio Manager, Motilal Oswal Financial Services. However, ONGC slipped 1.25 per cent to Rs 1,165. Bharti
Airtel dropped 0.07 per cent ahead of its decisive meeting with MTN.
OIL may fuel primary market
OIL’s strong debut removed fears that investor appetite for initial public offers would dry up after the lacklustre listing of a couple of companies such as Adani Power and NHPC in the recent past. NHPC rose 1.9 per cent on the listing day and is now trading at Rs 34.55, below its IPO price of Rs. 36. Adani Power is trading at Rs 101 against its issue price of Rs 100.
“The OIL listing is likely to bring in high retail participation in some of the other public sector IPOs,” said Amitabh Chakraborty, equity vice president at Religare Securities.
While pricing worries remain, bankers expect IPOs to raise over Rs 50,000 crore in the next few months. Power companies such as GMR Energy, Indiabulls Power and JSW Energy are expected to lead the charge along with public sector companies such as Bharat Heavy Electricals and NTPC and NMDC, which would launch follow-on offers.
The government is likely to divest 10 per cent of its holding in NTPC, which also plans to offer 10 per cent fresh equity and hopes to raise Rs 6,000 crore through its follow-on offer.
Satluj Jal Vidyut Nigam and National Mineral Development Corporation (NMDC) will also hit the capital markets with their initial public offer in this financial year.
While Anil Ambani-led Reliance Infratel announced its intention to raise Rs 5,000 crore (Rs 50 billion) from the primary markets, three real-estate firms Lodha Group, Emmar MGF and Sahara Prime City announced their IPO plans on Tuesday.
Some analysts think pricing remains a worry. “Even though the market seems to be flooded with new issue announcements, not all the shares may witness good listing unless companies shed their greed and leave something for investors on the table,” said Deven Choksey, managing director of Mumbai-based K R Choksey Shares and Securities.
