Sensex in sight of 7,000 pts

Market shrugs off monsoon blues.

Liquidity provided by institutional investors drove the Sensex closer to the magical 7,000 level. The index rose to a new three-month high as front-line technology and energy stocks gained on expectations of better performance, ignoring concerns about rising oil prices and poor rains.

Strong gains in select blue chip stocks, including a broad swathe of technology, energy and metals stocks, pushed the benchmark Bombay Stock Exchange (BSE) Sensex to a three-month high of 6,906.98, up 0.7 per cent (46.8 points) in today's trading.

One in every eight stocks traded hit 52-week highs in today's trading.

Of the 312 stocks that scaled 52-week highs today, 144 stocks touched life-time highs while 168 stocks were cruising at more than one-year highs.

On the National Stock Exchange, both the mid-cap and small indices closed at all-time highs.

Sandeep Neema, fund manager of JM Mutual Fund, said: "The market looks positive as the valuations are still not stretched and there is enough liquidity provided by institutional investors."

However, most of the fund managers are cautious about the bull run. "The progress of the monsoon will hold the key now," said a broker.

Frontline stock witnessed buying interest with only eight of the 30-share Sensex basket stocks ending the day with losses.

Among the big gainers in the Sensex basket, the Bharti Tele-Ventures scrip was up 5.45 per cent to Rs 239.75, on reports that the government was keen on introducing a uniform licence policy for telecom companies.

Refinery and oil marketing company Hindustan Petroleum Corporation's stock gained 1.2 per cent to Rs 321.50. The Tata Power scrip was up 2.71 per cent to Rs 388.90, the Grasim Industries scrip was up 2.65 per cent to Rs 1118.30, Dr Reddy's scrip was up 2.01 per cent to Rs 737.40 and Tata Steel scrip was up 1.63 per cent to Rs 339.60.

A leading market operator said, "In the next leg, domestic money will drive the markets to new highs. The demographics of India is going through a big change and I expect more and more money will be get diverted from the banking system into the equity markets."

The dollar's renewed strength against major global currencies propped up technology stocks. Technology bellwether Infosys Technologies' stock gained 1.14 per cent to close at Rs 2,258.05, Satyam Computers' stock gained 1.64 per cent to Rs 481.50. The Wipro scrip was up 1.72 per cent to Rs 734.70, and the TCS scrip was up 0.61 per cent to Rs 1271.90.

Dealers said metal stocks witnessed renewed buying interest as global metal markets have cooled off a little in the last few days, making stock valuations attractive again. Sugar stocks were in the limelight as investors started punting on a sugar price hike on the back of inadequate rainfall.

A dealer with a domestic broking firm said, "the foreign institutional investors have provided enough liquidity in the last few days pushing the markets up, as against the general perception that the markets may correct.

This has forced investors who had gone short in the futures markets to cover their positions."

The 7,000-level for the Sensex is very likely in the next few trading sessions. But markets may correct at it approaches its earlier all time high of 6,950, he added.