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Sensex ready to hit peak form

Mumbai, Oct. 16: The pre-Diwali fireworks ignited last Friday continued today as foreign institutional investors (FIIs) showed a big appetite for frontline stocks sending the bellwether sensex soaring to a height that was tantalisingly short of 13000.

Bolstered by better-than-expected corporate results, the BSE sensex finished at a record peak of 12928.18, a 191.76 points surge over the previous close.

The cognoscenti speculated about when the sensex would go past the historic level with most reckoning that it would go past that point long before moorat trading for new samvat year 2063 on Saturday.

With Tata Consultancy Services (TCS) announcing numbers that were above the street estimates and HCL Technologies also delivering a good stream of numbers, many believe that the sensex will cross 13000 in Tuesday's trading. While both these numbers came after market hours, Wipro will announce its second quarter results tomorrow.

“Based on the Infosys and TCS numbers, most of us are largely of the view that Wipro will not disappoint. Therefore, the BSE index is likely to touch 13000 in tomorrow's trade itself provided there is no major fall in overseas markets,” an analyst said.

He added that FIIs, which have been net buyers in the past four trading sessions, made net purchases of close to Rs 1,100 crore ($237 million) last Friday, up from Rs 539 crore on the previous day. Market circles, however, add that retail investors who burnt their fingers in the sudden crash that occurred in May this year are also slowly returning to the equity markets.

However, brokers say the FII interest has largely been restricted to large cap or frontrunners. Even in today’s trading, both the BSE Mid-Cap and Small Cap finished with a gain of 0.15 per cent and a loss of 0.29 per cent, respectively.

“The institutions are shying away from buying into these stocks. Retail investors should therefore carefully choose before they put their money into such shares,” a broker added.

In today's trading, the BSE sensex after opening at a modest 12785.03, hit an all-time intra-trade high of 12953.76 before ending at 12928.18, a jump of 1.51 per cent over Friday's close of 12736.42. The index has registered a sharp rise of 574.69 points or 4.65 per cent in the three sessions.

Market sentiment was boosted by a strong Asian trend during the day. While Japan's Nikkei ended up by 156.22, other indices that included the Hang Seng, Kospi and the Straits Times ended in the green. Last Friday, the sensex hit its lifetime high of 12,756.23, overtaking the previous all-time high of 12,671.11 set on May 11. This feat was achieved after Infosys Technologies came out with numbers that beat street estimates. Infosys, which kicked off the earnings season also, has raised its revenue guidance for the year. This coupled with the robust economic fundamentals have placed the equity markets in a much stronger position than they were in May, observers aver.

“It's not only the information technology sector that is doing well. Cement, hotels, infrastructure, banking industries all are performing well and they are likely to come out with an excellent set of numbers. We are now in a comfortable zone and new highs should be touched almost everyday,” says a research head of a leading brokerage. He adds that though allocation of FIIs to India is set to go up, there could be a small correction of up to 400 points in the coming days.

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