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Mumbai , Oct. 6

INVESTORS, institutional as well as retail, fuelled rallies in pivotal stocks today taking benchmark indices to new peaks, igniting hopes of a cracker of a Diwali, the festival of lights, three weeks from now.

Anticipation of some extraordinary corporate performances and tell tale signs of a robust year for the economy has driven investor confidence, both institutional and retail, to new highs.

The 30-share Sensitive Index of the Bombay Stock Exchange rose 1.72 per cent or 78 points today to break through the psychological 4,600-mark and close at 4631.39, a level not seen since June 2000. Dealers said the index could go through the 5000-mark before the end of October.

The broader S&P CNX Nifty of the National Stock Exchange closed nearly 30 points higher than its previous close at 1478.90.

Several pivotal stocks, such as Reliance Industries, Tata Motors (Telco), State Bank of India, Bajaj Auto and Hero Honda hit yearly highs today on the back of strong buying by all classes of investors. While automobile stocks rode on good September sales numbers, anticipation of good second quarter results fuelled the prices of several others.

The sustained run of the stock market cutting across segments is pulling in new investors, domestic as well as foreign. At an annual jamboree of fund managers organised by CLSA in Hong Kong last month, several global investors put India before China as a hot investment destination.

The strength of the Indian economy was highlighted today by a study by rating agency Crisil. The agency said trends in its rating portfolio indicated that improvement in Indian economy was set to continue.

The number of companies upgraded by Crisil during the first half of the current fiscal year outnumbered those it downgraded by four to one. "Strengthening business fundamentals of companies rated by Crisil found reflection in improved ratings," the agency said.

A dealer with a local firm concurred with the view. "We feel that the entire Indian economy is being re-rated. It explains the broad-based rally in the stock market," he said. According to him, strong institutional support, hope of good results, favourable factors for the domestic economy and growing retail participation would continue to drive stock prices.

Another equity analyst said this year's good monsoon is not yet fully factored in by the market. "FMCG scrips, for example, have not moved the way they should have after a good monsoon. The reason perhaps could be that the rally has been so general this time that investors had a wider choice of stocks to play with," he said.

A technical analyst said the market remains bullish overall. "The next resistance for the Nifty is around 1500 levels," he said. But there are concerns.

A fund manager with a public sector mutual fund said the market looks overheated. "It has run up too high too soon. Investors have begun to expect too much. If the performance does not match expectations, we would be in for a correction," he said.

Others are worried about foreign investor behaviour. "We are concerned about the money flows from outside the country. While we all know that hedge funds are present in the country, we do not know the extent of their participation, and that is a concern," said an analyst.

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