Sensex vaults to record close

Tech, capital goods, banking, FMCG scrips lead rally.

The Bombay Stock Exchange (BSE) Sensex closed at a record high yesterday as investors were encouraged by sustained foreign fund inflows.

The bullishness in the domestic market spilled over to the overseas markets, with the Skindia Instanex index of Indian depository receipts at an 11-month high on Monday.

The Sensex hit an intra-day high of 6,248.43 , just one point short of the record 6,249.60, on January 9 this year. It then eased to close at 6,234.29 points, up 1.24 per cent (76.52 points) from yesterday's close, comfortably topping its previous record close of 6,194.11.

Market capitalisation on the BSE rose to Rs 15,23,289 crore, up Rs 5,513 crore from Monday's  Rs 15,17,776 crore. Indeed, market capitalisation has shot up by a hefty Rs 2,16,239 crore, from Rs 13,07,050 crore on January 14, 2004, when the Sensex last closed at a high.

Technology, capital goods, banking and FMCG scrips were among the biggest gainers.. Of the 30 scrips in the Sensex basket, 22 closed with gains, reflecting the positive sentiment. But the breadth of the market was negative as players booked profits in mid-caps. Losers outpaced gainer 3:1.

Several marketmen today forecast the Sensex would climb further. Rakesh Jhunjhunwala, partner at brokerage firm Rare Enterprise, said, "Strong earnings, reasonable valuations and a correction of vast under-exposure to equities have driven the market so far. This is just the starting point of a long, long rally."

Narayan SA, managing director at Kotak Securities said: "The Indian story continues to attract attention, consequently foreign fund inflows are strong. Going forward, this should continue."

Abhay Aima, country head (equities) at HDFC Bank added, "Valuations are in line with the market at this stage. However, the market has been mainly foreign liquidity driven so far and the expected domestic participation will limit the downside."

Brokers said apart from the liquidity generated by strong foreign institutional buying, additional cash was being generated from within the market, from sales of mid-cap stocks. Mid-cap stocks have seen select selling over the last few sessions.

Brokers said even at its current high level, the Sensex commands a lower valuation than it did on January 14, 2004, the last time it hit an all-time high, brokers said. According to Business Standard Research Bureau data, the Sensex is trading at 15.74 times its earnings in the last 12 months, versus 18.06 times on January 14, 2004.

"Technically, we were expecting the market to rally and touch a new high which happened in today's trading. However, we expect the correction in the mid-cap stocks to continue and the market to move sideways before an upward rally up to the 6750-7000 range," Devang Visaria, technical analyst with Karvy Stock Broking said.

Deven Choksey, managing director of KR Choksey Securities, said: "Though the market has seen a sustained rally, it has gained on consolidation, indicating a fair distribution of buying. From a long-term perspective, the market looks positive with the next target for the Sensex being 6450."

Blue-chips were in the limelight, with more than 62 per cent of the total traded turnover of Rs 5801.92 crore in the cash segment of the National Stock Exchange accounted for by the 50 stocks in the S&P CNX Nifty. On the BSE, trades in Sensex stocks accounted for almost 41 per cent of the turnover of Rs 2,344.86 crore.

Out of the 11 sectoral indices on the BSE, nine closed with gains. The IT index was the biggest gainer, closing 1.89 per cent higher, followed by the BSE TECk index, up 1.70 per cent.

The BSE capital goods index was 1.04 per cent, the Bankex index gained 0.98 per cent and the FMCG index was up 0.78 per cent. The two indices posting losses at the end of the day were the consumer durables index, which was down 2.47 per cent, and the auto index was down 0.24 per cent.

The HDFC scrip was the biggest gainer in the Sensex basket, rising 4.04 per cent to close at Rs 800.55, followed by Ranbaxy Labs, up 3.51 per cent to Rs 1124.30. Bharti Tele-Ventures gained 3.03 per cent to Rs 173.55, L&T was up 2.89 per cent to Rs 903.15, Hindustan Lever gained 2.85 per cent to Rs 144.55 and Infosys Technologies gained 2.75 per cent to Rs 2148.35.

Reliance Industries gained 1.36 per cent to close at Rs 516.75 and Reliance Energy was up 0.96 per cent at Rs 560.65.

HPCL was the biggest loser in the Sensex basket, falling 2.25 per cent to Rs 338.70, followed by Tata Motors, down 1.59 per cent to Rs 482.85. ACC was down 1.26 per cent to Rs 286.80, Gujarat Ambuja Cements fell 0.80 per cent to Rs 368.10 and Dr Reddy's Labs was down 0.74 per cent to Rs 793.95.