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Pat & punch for markets

Mumbai, Sept. 19: Dollars continued to rain on markets, as did warnings putting investors on storm alert.

The weather, though, was not a bother for foreign investors determined in their resolve to keep shovelling cash into stocks despite unsettling forecasts of a cloud on the sunny spell. Amid calls for restraint, the sensex soared into a new orbit when it closed the day at 8444.84 points in an increase of 0.76 per cent, or 64 points, over the previous finish.

BSE struck the first note of caution, telling bleary-eyed investors leafing through morning papers how they must not let the chase for gains get the better of their wisdom.

The National Stock Exchange (NSE) did not leave it there. It went a step further, suspending more than 100 stocks and putting an equal number in the trade-to-trade segment to snuff out excess speculation by small investors.

Eye-brows have also begun to go up at Sebi, whose chief M. Damodaran said movements in some stocks were “inexplicable.” “We are concerned at the pace at which markets hit this level,” he said, adding the finance ministry, the RBI and Sebi were working in tandem.

Defying the scramble for checks and balances, the BSE barometer sped through to a new life-time high of 8461.10, cooling off at a low 8382.96. The nifty ended at 2,567.10.

The BSE index has risen a whopping 28 per cent this year as foreign funds sloshed more than $8 billion, making it the best performer in Asia after South Korea’s Kospi.

“Liquidity is driving the markets and the value of the fundamentals is sinking in. Retail investors, too, are participating in the latest phase of the rally. As a result, the under-valuation of India as a market is finally getting corrected,” Dhiraj Sachdev, fund manager at portfolio management firm ASK Raymond James, said.

Among the few warning signs were the trends in nifty September futures, which quoted at a discount to the spot price. Derivatives volumes declined to Rs 16,245.96 crore on Monday compared with Rs 17,250.53 crore on Friday. Sachdev said he would advise client-investors to ignore the indices and look for value stocks.

Leading the line-up of winners was ITC, whose shares jumped 3.1 per cent to Rs 1937 as investors rushed to build up holdings ahead of the September 28 record date for a 1:2 bonus and a 10-for-1 stock split. After playing second fiddle to other heavyweights, the shares of PSU oil firms surged, the sentiment boosted by reports that they will be allowed to sell cross-holdings.

That optimism was strong enough to blow away worries over oil prices, which climbed 1 per cent to $66.5 a barrel as a new storm, Rita, appeared headed for the US Gulf coast of Bahamas. Indian Oil Corporation gained 4.23 per cent at Rs 453.05 and Bharat Petroleum Corp Ltd firmed up 5.51 per cent at Rs 409.65.

UTV Software Communications jumped 7.34 per cent to Rs 188.75 after one of its units signed a $10-million deal with New York’s BKN New Media.

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