If Monday was a somewhat hesitant dab at an all-time high, Tuesday drove home the point forcefully and convincingly. The fact that bulls are in full control was quite clear and one could see strong momentum signs flashing on the trading screen.
A breakout into uncharted territory, and solid performance from mid-caps, is also attracting fresh trading interest. Volumes have picked up in the last couple of sessions. Total stock futures positions have now soared to around Rs 38,000 crore, which is not too little. Stock prices will feed on this as long as the momentum continues but it also raises the technical risks. For now, though, the momentum looks set to take the Sensex higher, even beyond the magic mark of 15,000, unless there is a sudden global reversal.
Even as the stronger sectors like capital goods and telecom exhibit leadership, the laggards are beginning to bounce back. Construction stocks have had a terrific run and real estate, perhaps rubbing off a bit from DLF's expected listing this week, is doing a jig. The way stocks like VSNL, Escorts, Voltas, Bongaigaon and Moser Baer added open interest in futures on Tuesday, it seems traders are going for the kill. One can only hope the tide does not turn suddenly against them.
There is an interesting listing on Wednesday from Vishal Retail; it should be a big bang one. It is a strong north Indian value retailer with a return and margin profile that compares very well with listed peers like Pantaloon and Shoppers Stop. The stock should list at a huge premium to its issue price of Rs 270, possibly upwards of Rs 600. It could even justify Rs 700, as at that price it would trade at 38 times expected FY08 earnings, compared to PE multiples of above 60 for its listed peers. The interesting thing would be to observe till what level investors are comfortable buying Vishal. We may be surprised.
(The writer is Executive Editor, CNBC-TV 18)