On a day of festive news from Mumbai and Bangalore, it’s hard to decouple the Sensex and Sachin. Both the bellwether index and the cricket sensation were formed in the ’80s. Both hit lows in 2008. And as the Sensex bats its way to an all-time high, Sachin revels in his best season.
Unabated foreign institutional investor (FII) fund flows and a bout of short covering drove the key equity benchmark indices, the Bombay Stock Exchange (BSE) Sensex and National Stock Exchange (NSE) Nifty, to their strongest gains in five months on Wednesday. Both rose 2.4 per cent above their previous close, as FIIs brought stocks worth Rs 2,102 crore in a single trading session. Net FII investment this year has topped Rs 1 lakh crore.
“Along with FII inflows, there was a significant amount of short covering. However, there may not be a correction until the Coal India public issue opens. It is the period after subscription to this IPO that we are worried about,” said Ambreesh Baliga, vice-president at Karvy Stock Broking.
According to (BSE) provisional figures, Wednesday’s purchases were the highest made by FIIs this week so far in the cash segment of the equity market. A large part of this year’s inflow comes via India-focused exchange-traded funds.
On Wednesday’s big market push came after strong openings by global peers, following a US Federal Reserve statement that it would provide a further boost to economic recovery. The benchmark Sensex has risen 18.5 per cent so far this year, and is a stone’s throw from its lifetime high of 21,206.77 hit in January 2008.
On Wednesday’s rally was led by information technology stocks, which rose sharply a day ahead of the scheduled quarterly result announcement by Infosys Technologies. The BSE Sensex rose 484.54 points to close at 20,687. The broader NSE S&P CNX Nifty was up 143 points to 6,233.
| TOP 5 INTRADAY GAINS | |||
| DATE | CLOSE | Chg* | %Chg* |
| 10-May | 17,330.55 | 561.44 | 3.35 |
| 13-Oct | 20,687.88 | 484.54 | 2.4 |
| 13-Sep | 19,208.33 | 408.67 | 2.17 |
| 1-Oct | 20,445.04 | 375.92 | 1.87 |
| 26-May | 16,387.84 | 365.36 | 2.28 |
| (This fiscal) * Over previous close | |||
Infosys gained 2.48 per cent. Other IT company stocks, including Tata Consultancy Services and third-ranked Wipro, gained 4.6 per cent and 4.5 per cent, respectively.
The BSE IT index rose 3.15 per cent. Among others, the BSE TECK index was up 2.72 per cent. BSE Consumer Goods gained 2.68 per cent. Other sectoral indices rose between 0.9 and 2.5 per cent.
According to Baliga, FII funds were flowing into India as other emerging markets had already instituted capital control measures.
“India is the only emerging market country where FII flows are still not under any major restriction,” he said.
“Traders need to be cautions and not read too much into today’s rally. Many traders were prematurely short today, expecting correction. But they were forced to close their positions, which gave a further impetus to the rally,” said Brandon Wendell, senior instructor at Mumbai-based Online Trading.
“However, an important warning that markets may not rise at this pace can be taken from the shares of Reliance Industries, which failed to close above the resistance level of 1,074-1,090. With a major index component at resistance, we may see profit-taking soon,” he said. Wendell feels the Nifty could fall back to support levels of 6,030 and the Sensex to 20,030.
Global stocks rose on increasing expectations that the US Federal Reserve would ease policies to support the economy. MSCI’s all-country world equity index was up 0.7 per cent at 10.50 GMT.
Among other indices in Asia, the Hang Seng rose 1.45 per cent. The Straits Times was up 1.68 per cent. The Sanghai Composite gained 0.7 per cent and the Nikkei 225 was up 0.16 per cent.
In Europe, Frankfurt’s DAX was the top gainer, up 1.85 per cent. The Paris CAC 40 rose 1.72 per cent and London’s FTSE 100 was up 1.45 per cent. US stocks had hit fresh five-month highs on Tuesday after the Fed’s latest meeting indicated it may once again flood markets with cheap cash “before long” to further boost growth.
