Riding on a liquidity push from foreign institutional investors (FII) and domestic institutions, the benchmark BSE Sensex crossed 13,500-point mark in intra-day trading on Wednesday, but could not sustain its higher levels as profit-booking followed. However, it closed at a new record high.
The early surge raised hopes that the market may cross the 14,000-points mark within a month or so.
BSE opened strong at 13,476 points, over 50 points above the previous close, but lost ground to dip below the 13,400 levels in an hour’s time. Amid volatility it gained all the lost ground in the first half, and surged past the psychological barrier at about 2.10 pm before closing at 13,469 points with a gain of 43.87 points. The National Stock Exchange's Nifty gained 10.40 points at 3,876.30 over the day.
Scepticism apart, punters believe there is a ghost of a chance for the market, driven by huge liquidity for the last few weeks, to cross 14,000-point mark by December-end.
“Liquidity is driving the rally. Until we see some seriously negative development or news, the Sensex is likely to sustain its momentum. Though there are no negatives expected on the domestic front, there are some in the global scenario, like crude prices,” said Nischal Maheshwari, senior vice-president at Edelweiss Securities.
Lalit Thakkar, chief investment officer of Angel Broking, was more categorical.
"FII inflows are expected to rise in December with new allocations pegged at higher levels. Retail investors who have shied away from the market are also back after making up their losses,” he said.
“Even the negatives have subsided with interest rates softening in the government securities market, and global oil prices remain subdued," he said.
Since July 21, when the current rally took roots from a level of 10,086, the Sensex has posted a gain of 33.5 percent. Banking, power and telecom sectors have posted gains during the rally, even as investment patterns turned towards individual stocks as against a sector-specific approach adopted earlier.
“Though everything looks good, a technical correction is expected anytime now. However, that may not be steeper than 500 points from this level. This can be understood from advances still below declines on Wednesday,” said Ashok Choksey, director of KR Choksey Shares and Securities.