Mumbai, July 22
THE bulls bounced back with a vengeance on Friday, perhaps, to prove that the marginal downturn in the bourses over the last couple of days is not the onset of an extended slump in the market.
Though the last two months have seen several all time highs in the market, today's 119-point rise in the index is deemed special by market participants, as the Sensex breached the 7,400-level.
The last hour of trade took the 30-stock benchmark index to an intra-day high of 7429.95, before closing trade at 7423.25, netting a 1.63 per cent gain.
The Nifty traced a similar pattern and gained 35.1 points and ended at 2265.60, an appreciation of 1.57 per cent on Friday.
The foreign institutional investors (FIIs) continue to pump in liquidity into the domestic bourses, fuelling this run-up. Aggressive buying, especially in heavyweights, marked the trading pattern of the day, say brokers.
"Valuations have taken a backseat at these levels. Foreign investors, generally, have lower expectations of returns when compared to domestic investors. While foreign investors may be satisfied with eight per cent returns, Indian investors usually seek 14 per cent. So our markets may be attractive to foreigners even at these levels," said Mr Ajit Surana, Managing Director, Dimensional Securities Pvt Ltd.
Brokers have been advising clients not to infuse fresh funds into the markets at this stage.
"Our advice to clients to establish stop losses every week based on the previous week's highs," Mr Surana said.
The exuberance in the market today was despite the lower-than-expected results posted by IT major Wipro.
Banking stocks were much in favour and BSE Bankex netted gains of 2.52 per cent.
The Reserve Bank of India, in the meantime, has allowed FII purchase in Adlabs Films and Reliance Capital up to 40 per cent and 49 per cent, respectively.
On the backdrop of this upsurge in the bourses, the Finance Minister, Mr P. Chidambaram, cautioned investors and said that the stock market reflects the current potential of the economy.
"We hope stakeholders will respond in a measured manner and not show undue exuberance,'' he said.