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Magical Monday: Sensex breaches 13K

The index soars past 13,000 on buying of funds buoyed by strong corporate results, reports Arun Kumar.

india Updated: Oct 31, 2006 03:51 IST
Arun Kumar

The bulls were rampaging on Indian bourses on Monday. Both the key indices, the Sensex and the Nifty, reached all-time highs - 13,039.30 and 3776.05 respectively - during intra-day trading sessions.

The Sensex closed at a record 13,024 and the NSE Nifty at 3,769.

Since June 14 - when the Sensex was down to 8,929, the market has, on an average, added 1,000 points every month.

Experts said the current surge was different from earlier ones. Hemendra Kothari, chairman and managing director, DSP Merrill Lynch, said the brand 'Corporate India' had undergone a dramatic change.

"The India growth story has become globally acceptable," he said. "Through some big-ticket acquisitions, Indian entrepreneurs have proven they have the financial muscle and the capability to manage businesses beyond the physical boundaries of the country."

The experts said that though China remained an important destination for foreign direct investment, India too was becoming an integral part of global portfolio (equity) investments.

Anurag Mehrotra, vice-president and head of wealth management, Edelweiss, said: "Tata Steel acquiring Corus Steel, GHCL taking over Dan River and Rose Bye, Mahindra & Mahindra's acquisition of Germany's Zeco Holding AG, and many other such deals have clearly established that India is emerging an important location.”

Ved Prakash Chaturvedi, managing director, Tata Asset Management Company, said India had established itself as an important 'asset class' for global investors. "Investors who want to play a role in emerging market cannot ignore the Indian equity market," he said.

In the past three months, foreign institutional investors (FIIs) have invested $3.5 billion. In the past 10 months, 50 FIIs registered with the Securities and Exchange Board of India, taking their total number to 973.

With retail investors getting into equity investment, domestic mutual funds are also becoming significant players. Since April, mutual funds have invested Rs 10,337 crore in equities.

Another key difference between this bull run and previous ones is that the macro factor has changed significantly in favour of emerging markets and India. Chaturvedi said the outlook for oil prices and interest rates, especially in the United States, was becoming more benign and as a result, the rupee too looked more stable.

Mehrotra said corporate India had surprised global investors giving them better results than expected, and no fund manger could afford to ignore portfolio investment in Indian stocks.

Kothari said the fund flow would remain strong provided there was sufficient supply of equities in the market. "One of the biggest concerns is whether the infrastructure sector will also grow which is essential to support an economic growth of  eight per cent," he said.

Email Author:arunkumar@hindustantimes.com