Mumbai, Dec. 10: Shares zoomed to new highs in a surge fuelled by hopes that foreign institutions (FIIs) would step up the pace at which they have been shoveling funds into markets, giving them their best run yet.
The expectations of a fresh burst of FII buying in 2004 peaked on Dalal Street, where the Bombay Stock Exchange (BSE) sensex scaled a new 44-month high — even soaring past the psychological 4300-mark before cooling off.
So overwhelming was the charge of the bulls that only six stocks plumbed lows against 458 that finished higher. Automobile, cement and oil shares powered the rally as the sensex closed up 1.07 per cent at 5,285.54 points, gaining almost 3 per cent in two straight days.
It also beat its previous 44-month closing high reached on Tuesday. The main index has gained almost 56.5 per cent in 2003.
Reliance Industries and ITC hogged the limelight on sustained purchases by foreign institutional investors (FIIs) as well as domestic mutual funds, and were responsible for driving the sensex substantially higher.
Reliance gained 2.6 per cent at Rs 498.50, while state-run Oil and Natural Gas Corporation jumped 5.5 per cent to Rs 682.25. ITC spurted 3.3 per cent to Rs 982 on rumours that the Rs 804-crore tax dispute will finally end in the company's favour.
In fact, the sensex touched an intra-day high of 5300.79 and closed the day with a gain of 56 points.
It was a complete sweep as the market also saw the rally hotting up in the mid-cap pharma and technology stocks.
The nifty gained 11 points and closed at 1686 points.
Discounting marginal net sales by FIIs and domestic mutual funds, sources said the market is expected to remain upbeat.
The gains made today were also typical of a bull rally. It was an across-the-board rally on the back of gains registered in old economy counters. Technology stocks came to life by mid-session, but could not maintain the upward thrust and lost some of their gains towards close.
Institutional brokers expect major pivotals to add more weight in the coming days, based on the pattern of investment made by foreign institutions. They prefer to bet on major pivotals, thus raising the values of Hindustan Lever, ITC, Reliance and ONGC stocks. Since these stocks make the index, a rise in them will see the sensex scaling new heights.
A perception that the market regulator is vigilant has dramatically reduced the chances of a scam similar to the bull rallies of yesteryears and has helped investors to be more confident.
However, according to dealers, if foreign investors continue to focus on India, the markets will remain exuberant. Any big ticket selling by the FIIs could change the situation dramatically.