The Hindu Business Line : Sensex hits 15,000; fund inflows, monsoon boost sentiment

Mumbai, July 6 The stock markets continued their upward trend on Friday with the country’s benchmark index, the BSE Sensex, crossing another milestone of getting past the 15,000-mark. However, the market was not able to sustain this level and closed at 14,964.12, a 0.69 per cent or 102.23-point increase from the previous day’s close.

The broader index, the C&P CNX Nifty, also reached its all-time high intra-day at 4,411.00. The index closed up 0.85 per cent at 4390.95.

The rise was led by technology and telecommunications stocks like Infosys whose stock was boosted due to expectations of good results. Infosys is due to announce its results next week. The stock closed up 2.85 per cent at Rs 1,971.25.

IT index

The IT index led the rally in the market on Friday with the index gaining 3.31 per cent at 4,950.53. “Tech shares took the lead today. But I don’t think they will continue to go up because of the strength of the rupee,” said Mr Vijay Kedia, Managing Director, Kedia Securities.

“IT stocks will be an underperformer in the medium term. Dollar earnings continue to be good, but the strong rupee will pull them down,” said Mr Balasubramanian, Chief Investment Officer, Birla Sun Life Mutual Fund.

Foreign fund inflows, a booming economy, a good monsoon as well as a steady inflation rate have helped boost sentiments in the markets as well. “There were a lot of worries in the last 3-4 months such as inflation, interest rate hikes and the appreciating rupee. A lot of these fears have been allayed. Inflation has come down. The Prime Minister has also announced a meeting to work out how the Government can help exporters who have been hit by the appreciating rupee,” said Mr Lalit Thakker, Head-Research, Angel Broking.

FII buying

Inflation rose marginally to 4.13 per cent for the week ended June 23. “A lot of FII buying has come in through the increased number of IPOs. There is also good secondary buying,” said Mr Balasubramanian. FIIs were net buyers to the tune of Rs 541.39 crore, according to provisional data available on the NSE.

Select sectors have been leading the rally in the market. But banking stocks were down, having been pushed up in the last few days. “In a bullish market, one sector is always going to be stronger than another,” said Mr Thakker.

“The market is moving on a rotation basis. Bank stocks were doing well, then it was the turn of real estate and construction stocks. This way, the market is never overbought as investors keep switching sectors,” said Mr Vijay Kedia, Managing Director, Kedia Securities.

Bankex was down 0.78 per cent at 8123.79, the Consumer Durables index closed lower 0.71 per cent at 4213.64. The Healthcare and Metal indices were the other two indices that closed in the red on Friday, falling 0.46 and 0.38 per cent respectively. All other indices closed in the green.

The market breadth was positive with the stocks of 1,476 companies advancing and 11,004 declining.

The price to earnings ratio of the Sensex is 21.48, which, according to market men, is a little expensive compared to valuations in other markets. “India commands a 25 per cent (higher valuation) over other premium markets,” said Mr Kedia.

“A correction would be a function of demand and supply. Investors might look to book profits now,” said Mr Balasubramanian.

“I don’t really see a correction coming. The intra-day dip in the market is the (only) correction that I see,” Mr Kedia said.

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