The Telegraph
Since 1st March, 1999
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Launch pad for higher orbits

Mumbai, Nov. 3: If there’s anything about the manner in which Point 5000 was conquered today, it was speed.

From 3800 in April 2003 to 5050 levels on November 3, the march of the sensex has been more than 1150 points. This prompted heady operators to bet that the stock markets would now be propelled into uncharted space.

“The bull rally of 2003 is marked by the fastest-ever rise witnessed in recent history,” said analysts. It took the 30-share index more than a year to climb from 2741 in October 1998 to 5150 in October 1999.

“It’s a money-driven rally,” says Arun Kejriwal of Kejriwal Research and Investment Services. The rally that started in the fag end of April 2003 with the sensex in the region of 3800-3900 has seen foreign funds pour money into the markets like never before, buying what they perceive to be good value stocks at bargain rates.

Last month, FIIs invested close to $1.5 billion, the highest-ever they have done in a month on Indian bourses.

This time, there is no negative news. This is different from the past, when a rally ended with a thud as scams punctured a hole in the stock price boom. Many brokers who fuelled the rally were caught in the rip-off.

“It is headed significantly higher in the longer term of three months. It may go down in the short term, but is certainly headed higher in the longer term,” said Ramesh Damani, a prominent BSE broker. On the markets being disappointed today after the RBI failed to deliver the much-expected bank rate cuts that would have nudged interest rates further southwards, Damani echoed the sentiments of Dalal Street by saying: “The stock markets have seen a letdown before.”

He was referring to the U-turn on a divestment process that would have led to the privatisation of HPCL. The markets are more focused on the economic outlook, which has brightened after one of the best monsoons and the steady torrent of good corporate results.

To top it all, the Reserve Bank today said it expects the growth rate to rise up to 7 per cent, up from 6 per cent it had predicted at the start of this financial year.

Ajit R Sanghvi of MSS Securities, an institutional brokerage affiliated to BSE, pointed out that the markets are moving up along with high volumes. “The main characteristic of this bull run is that it is FII-led.”

The surge was broadbased when it started, covering a wide range of stocks, but is now centred on index shares.

The incremental gains in the FII inflows is not going up, which is a worrying sign. At high levels, the markets are not seeing the same enthusiasm by FIIs.

“So, there is a worry that the present rally is not sustainable,” an FII analyst said. The key to investing in the coming days, according to Sanghvi, is the ‘art of selling’.

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