Mumbai, Sept 26: The early morning euphoria on the rain-swept streets of Mumbai where people thronged to welcome the victorious men in blue seemed to have rubbed off on the bourses a couple of hours later as the sensex scaled Peak 17000 — a 1000-point blitz in an eye-popping five days.
The bellwether index — which topped 16000 on September 19 — rapelled up to conquer a new summit with renewed gusto as foreign investors continued to shovel more dollars into Indian equities, which are yielding returns of around 40 per cent this year.
The returns on the Indian stock market are way short of those in Taiwan and China, but the greenbacks are flowing in because overseas investors reckon that the Indian bourses still have the headroom for growth while the others don’t.
“We believe that though the Indian markets are tending towards fair valuations, the FII inflows into India will decide the trajectory from hereon,” said A.S. Narayanan, managing director of Kotak Securities Ltd.
Since Federal Reserve chairman Ben Bernanke trimmed short-term interest rates by 50 basis points on September 18 — the first rate cut in the US in four years — overseas investors have piled into Indian equities.
Overseas investors bought a net $322 million shares on September 24, taking their total equity purchases this year to $11 billion which tops the previous record of $10.7 billion set in 2005. Result: the sensex surged to a new intra-day high of 17073.87 on Wednesday.
But it then wobbled on a bout of profit-taking to the day’s low of 16887.07 points as punters scooped up some of their gains, before closing at 16921.39, still higher by 21.85 points from Tuesday’s close.
The National Stock Exchange’s Nifty 50 came tantalisingly close to the 5000 mark when it touched a day’s high of 4980.85 before easing at the close to 4940.50.
Bank and technology stocks were the frontrunners today, buoyed by the Reserve Bank’s move on Tuesday to relax rules on overseas investment, which is expected to tame the rupee’s rise.
ICICI Bank, which closed at Rs 1,019.40, hit a life-time high and was the biggest contributor to the sensex surge. The State Bank of India also hit a new high before closing at Rs 1,848.10, up 2.5 per cent.
Infosys, which will kick off the second quarter earnings season on October 11, rose 3 per cent to Rs 1,824.30, spurred by the prospect of a stable rupee. TCS rose 3.9 per cent and Wipro gained 4.3 per cent.
Punters gouged out gains from the Reliance pack and the frontline stocks of brothers Mukesh and Anil — Reliance Industries (RIL) and Reliance Energy — swooned in late afternoon trades.
RIL tumbled 3.2 per cent to Rs 2,321.95, after the stock rose more than 18 per cent in the previous six sessions and turned Mukesh into the richest Indian ahead of Laxmi Mittal. The stock stuttered on reports that the company may put on hold investment plans to expand its retail venture in Uttar Pradesh.
Reliance Energy lost 5.6 per cent to Rs 1,026.20. The stock is still up nearly 32 per cent this month.