• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• Smartbuy

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Shashi Ashiwal

Close watch: An investor keenly watching the rising BSE Sensex in Mumbai on Wednesday. The Sensex surged 838 points after the UPA Government won the trust vote on Tuesday. –

Our Bureau

Advertisement

Mumbai, July 23 The nearly 6 per cent gain for the Sensex on Wednesday appears to be more of a euphoric reaction to UPA’s winning the trust vote in Parliament rather than on the basis of any underlying fundamentals, said market experts.

Market analysts had mixed feelings about the uninterrupted five-day rally in the stock market, which they feel is now far too stretched and could end at any time.

Over the last five consecutive trading days, the Sensex has gained over 2300 points; it has gained more than 500 points three times. Wednesday’s 838-point gain was the highest of the last five days, and took Sensex very close to the 15,000-level.

Mr Anand Tandon, Director and Head of Equity, Brics Securities, said that rallies of such proportions haven’t sustained for a long time, especially when the fundamentals at the macro level remain unchanged.

“I would be surprised if the rally sustains. Only if the commodity prices crack to a great level is it then justified,” he said. “It’s a rally in a bear market, it can get over any day as negative factors are still there. The Government scraping through the trust vote is not enough for the market, inflation and other negative factors are still there,” said Mr Sudhanshu Pandey, Technical Analyst, LKP Securities Ltd.

“This rally is a false rally, one shouldn’t get trapped, and it is time to book profit and wait for Nifty to correct to the 4100 level. The Nifty may peak out at 4550 or 4725, as people will try to get out with marginal profit or marginal losses,” added Mr Pandey.

The index has gained over 18 per cent in as many sessions, rising from a low of 12,575 point to 14,942 points. “On the fifth day of the rally, there are stocks that have gone up 40 per cent during this short period, but for people who entered market at still higher levels in January, it doesn’t mean anything; they still have marked-to-market losses on their portfolio,” he observed.

“Today’s rally was across the board, people believe that without the Left parties, the UPA Government can pursue reforms at a faster pace; there will be some disinvestment to bridge the fiscal deficit,” said Mr Bharat M. Shah, Head of Institutional Sales, Ventura Securities. The progress of the monsoon was also going to emerge as a major concern, if it doesn’t rain in peninsular India for another week, said analysts.

“Today the international markets were good, crude also went down, the only negative is the progress of the monsoon, but after 7-8 days, people will start seriously talking about this as a major concern,” said Mr Shah.

More Stories on : Stock Markets | Outlook | Politics

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Weekend rains likely over peninsula

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line