Broad-based buying in auto, construction, tech sectors

Our Bureau

Mumbai, March 1

A day after the Finance Bill 2006-2007 was presented, stock prices moved up substantially driving key indices to record highs.

The benchmark BSE Sensex ended at a new high of 10565.47 points. Dealers said both foreign funds and domestic funds, which were cautious days ahead of the Budget, have turned aggressive buyers on the stock markets on Wednesday.

The BSE Sensex rose by 195.23 points (1.88 per cent) after buying lifted key index stocks - Bajaj Auto (up 4.38 per cent to Rs 2,715.4), BHEL (up 4.15 per cent to Rs 2,110.30), Grasim (up 4.38 per cent to Rs 1,818.70), Infosys (up 2.57 per cent to Rs 2,906.25), Tata Motors (up 3.90 per cent to Rs 8,46.10) and ACC (up 8.83 per cent to Rs 683.10). The NSE's S&P CNX Nifty also touched a new peak of 3123.10 points on Wednesday, an increase of 48.4 points (1.57 per cent) from Tuesday.

"Investors have been cautious during the run-up to the Budget, in order to avoid the policy and event risk. Now that the Budget announcements are over, we believe liquidity will follow, as India has become the preferred asset class for FII flows. We remain hopeful regarding domestic liquidity as mutual funds are in cash, and mostly remained on the sidelines during February," said local brokerage Brics PCG (Privileged Client Group), in its analysis.

Broad-based buying was seen in sectors such as auto, construction, cement, tech, consumer durables and metal. Notwithstanding any pressure from the negative cues across the global markets and rising crude oil prices, the Sensex climbed higher.

"I would advise investors to sell little bit at these levels to guard against uncertainties in the January-March earnings numbers and likely redemption pressure for mutual funds," said Mr Gaurang Shah of Geojit Financial Services.

"Its better to book profits for every rise from these levels," he said. Mutual funds have mobilised about Rs 10,000 crore from NFOs in the last two months alone, which are expected to come into the stock markets, dealers said.

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(This article was published in the Business Line print edition dated March 2, 2006)
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