It took precisely one minute to change the fortunes of stock-market investors. At 1.19 pm on Friday, the Sensex crossed the 15,000-point milestone, raising the market cap by Rs 29,000 crore. By 1.20 pm, it started falling again, to eventually close at 14,964 points. But that minute was enough to send seven months of worry out of the window.
July 25, 1990 - 1,000
Investors had turned cautious since December 5, 2006, when the index raced past 14,000 points. Rising inflation, interest rate hikes, a spike in crude oil prices and a rapidly-rising rupee had checked the Sensex. "These concerns are weighing down every market. The Indian performance is not massively out of line with other markets. And there are still a lot of investors waiting to come in," said Andrew Holland, MD, DSP Merrill Lynch.
That market sentiment is a fickle thing was once again evident. The markets actually opened lower and heavyweights Reliance Industries and ICICI were down. The rupee appreciated against the dollar for the fourth straight week to Rs 40.45. Fears of a slowdown in the US loomed large. Oil also spiked to an 11-month high of over $75 per barrel and 15,000 appeared a distant destination.
But IT stocks revived on the perception that they have been unduly pushed down. By evening, analysts were happily predicting 17,000 points by the year-end.
"Corporate performance and liquidity make for the perfect cocktail," said R Sreesankar, head of research, IL&FS Investsmart. From 10,000 to 14,000, the Sensex moved on the strength of economic growth. Corporate results and cold cash contributed to the next 1,000-point gain.
But the odds are against further gains. The biggest worry is oil. The government has not passed on the fuel price hike to consumers. The inevitable hike can only add to inflation and lead to another rise in lending rates.