Sensex claws back 191 points to end at 10,765.16

The Sensex surged to a new high of 10,782.34 points today, fuelled by aggressive buying by foreign and domestic financial institutions.

Data showing a strong 8.3 per cent growth in industrial output in January and reports that rains are expected to be normal this year fuelled the sharp rally. Farm-related stocks like Punjab Tractors and Mahindra & Mahindra went up sharply. The index ended the day at 10,765.16, registering a sharp rise of 191.62 points.

The S&P CNX Nifty gained 55 points to close at 3183.90. The market breadth was strong, with 1,446 shares advancing and 1,100 shares declining. The total turnover on the BSE was Rs 4,716 crore and on the NSE Rs 9,443.50 crore. On Thursday, FIIs were net sellers to the tune of Rs 287 crore when the Sensex was up 64 points.

FIIs have pumped in $3.086 billion into the cash market in 2006, with $1 billion coming in just nine trading sessions.

While the FII inflows in January were only $737.50 million, February witnessed aggressive inflows of $1.3 billion.

"FII investment in many of the blue chip stocks has reached the maximum limit and there is a limited supply in the market as FIIs are holding back their investments." said Rajesh Gandhi, analyst in Edelweiss Securities.

"FII buying was mainly witnessed in cement, steel and FMCG companies. Continued demand for these stocks combined with the unwillingness of FIIs to sell their holdings is leading to a demand-supply gap in the market which is boosting the benchmark index," said a broker.

All the sectoral indices on the BSE closed in the positive. Renewed buying interest was witnessed in the technology scrips. The BSE IT index, the biggest gainer among the sectoral indices, rose 2.48 per cent.

Stocks like Satyam Computer was up 3.3 per cent to Rs 811.60, HCL Infosystems (up 3.5 per cent to Rs 184), Infosys Technologies (up 2.75 per cent to Rs 2920.75), TCS (up 2.5 per cent to Rs 1765), Wipro (up 1.30 per cent to Rs 518.50) and i-flex Solutions advanced by 2.5 per cent to Rs 1207.

Hindustan Lever gained 3 per cent at Rs 252 and ITC added 2.3 per cent to Rs 177. Among banking stocks, HDFC advanced 3.4 per cent to Rs 1,323. ICICI Bank was up 1.8 per cent at Rs 613 and SBI added 1.6 per cent to Rs 920. Bajaj Auto zoomed over 3 per cent to Rs 2,754. Hero Honda rallied 2.7 per cent to Rs 904 and Tata Motors moved up 2.4 per cent to Rs 896 while Maruti gained 1.4 per cent at Rs 878.

Among capital goods companies, Larsen & Toubro surged 2.9 per cent to Rs 2,513 and Bhel added 1.6 per cent to Rs 2,127.

In the pharma sector, Cipla and Dr Reddy's spurted 1.4 per cent each to Rs 583 and Rs 1,351, respectively. Cement stocks witnessed some profit-taking towards the closing bell today. Grasim finished almost flat at Rs 1,889, ACC and Gujarat Ambuja pared gains but were still up over 1 per cent each at Rs 760 and Rs 99, respectively.

"The momentum is expected to continue. At this rate, the market may touch the 11,000 mark even before fourth quarter financial performance of India Inc is made public," said a fund manager.