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Sensex hits 21,000; trade with caution

business Updated: Oct 25, 2013 01:11 IST
HT Correspondent

Foreign and domestic interest in Indian equities took the BSE Sensex to a three-year high of 21,039.42 on Thursday — the first time it crossed the 21,000 mark since November 8, 2010 — but profit booking took the benchmark index down to 20,725.43 points, a loss of 42.45 points over Wednesday’s close.

“FII money has flowed into several emerging markets including Korea, Taiwan and India fuelling rallies,” said Rajesh Cheruvu chief investment officer, RBS Private Banking.

Receding fears of an immediate unwinding of QE3 and the reopening of the US government buoyed the market, but fears of a repo rate hike by RBI in its next policy review due next week and its impact on GDP growth prompted investors to cash out late in the day.

“After underperforming for most of the year, the Indian equity market turned the corner in September, outperforming most emerging market peers (except Russia and Brazil) in both local currency and dollar terms,” said Abhay Laijawala, head of research, Deutsche Equities India.

Till afternoon, 29 of the 30 Sensex shares were posting gains over Wednesday’s levels but this situation reversed quite dramatically by the end of the day. Nineteen Sensex shares, led by TCS, Reliance Industries. Wipro, Infosys, Coal India and Jindal Steel ended the day with losses.

“Wednesday’s decline was led by selling pressure in the IT (down 1.77%), power (down 1.14%) and realty stocks (down 1.12%).

But analysts remained bullish about Indian equities over the next year. “India will remain an attractive destination for FIIs, being the second fastest growing large economy, despite structural challenges of high inflation and slow reforms,” said Cheruvu.