Sensex past 8,000 on bull run

Index up 129 points at 8072.75 on FII buying.

The stock market continued its resurgence after the recent hammering, with benchmark indices ending the day on a strong note.

Firm trends in most emerging markets in Asia and the US lifted sentiments at the bourses. The 25-basis point hike announced by the US Federal Reserve did not have much impact on the markets, as the hike had already been priced in, said dealers.

"A significant reduction of over-leveraged positions in the past few sessions and better-than-expected quarterly results in key Sensex stocks helped the markets pull back," said Rahul Rege, head of sales at Sharekhan.

The Sensex crossed the psychologically important 8,000-point mark during the day to close at 8072.75, up 128.65 points. The S&P CNX Nifty advanced 32.30 points to settle at 2419.05. But what is causing concerns is the fact that the rise in indices has come on the back of low volumes, indicating a lack of fresh buying interest.

The Bombay Stock Exchange today clocked a turnover of Rs 2,147 crore compared with Monday's Rs 2,115 crore. Dealers attributed the low volumes to the festive season, with investors unwilling to take fresh positions. The markets will remain closed on Thursday and Friday.

The rally at the bourses in the past three sessions has resulted in investor wealth increasing by Rs 84,880 crore. The BSE's total market capitalisation has increased from Rs 2,006,757 crore on October 28 to Rs 2,091,637 crore.

With this, the Sensex has gained 387.11 points over the past three trading sessions. This is in stark contrast to the precipitous 1114.32-point fall in the index between October 4 and October 28.

After being net sellers in the month of October to the tune of Rs 3,693 crore, foreign institutional investors have turned net buyers again. They were said to have bought shares worth Rs 52 crore yesterday, the first time they turned net buyers after 10 trading sessions.

The market breadth was decidedly positive, with advances far outnumbering declines. While 1289 stocks gained during the day, 1038 scrips declined and 38 remained unchanged. Among the 30 Sensex stocks, 24 gained while the rest declined.

Today's rally was led by gains in the FMCG, information technology, cement, two-wheeler and metal scrips. "Strong monthly data in the two-wheeler segment and a cement price hike have helped improve sentiments," said Rege.

Engineering major L&T was the biggest gainer among the Sensex stocks. The stock advanced 6.68 per cent to close at Rs 1509.50. Grasim (up 4.74 per cent at Rs 1178.90), Gujarat Ambuja Cements (up 4.65 per cent at Rs 73.10), HDFC (up 3.37 per cent at Rs 1001.80) and Hindalco (up 3.07 per cent at Rs 120.70) were the other big advances.

Banking stocks continued to be under pressure for the second consecutive day. HDFC Bank (down 1.41 per cent at Rs 620.15) and SBI (down -0.91 per cent at Rs 830.55) were among the losers.

However, it was auto stock Maruti Udyog which reported the maximum losses during the day. The stock declined 1.70 per cent to close the day at Rs 542.05.

All sectoral indices advanced during the day.

The BSE consumer durables index recorded the maximum gains (up 2.69 per cent), followed by the BSE Metal index (up 2.54 per cent). The gains in the mid cap and small cap segments were subdued in comparison. The BSE mid cap index and the BSE small cap index posted gains of 0.46 per cent and 0.09 per cent, respectively.

'The outlook remains positive,' said Ambareesh Baliga, vice-president, Karvy Stock Broking. 'Markets are expected to bounce back to 9500-10000 levels before next Diwali on the back of adequate liquidity, renewed interest of institutional players (domestic as well as foreign) and strong corporate results.

However, profit-booking before this is not ruled out,' he added. Baliga said the markets were likely to be volatile in the short-term and the Sensex might tumble to as low as 7500-7525 levels, where it should find strong support.