Sensex zooms past 9870

Has the pre-budget rally begun on the back of the government reviewing and rationalising FDI norms in several verticals?

india Updated: Jan 28, 2006 19:45 IST

Has the pre-budget rally begun on the back of the government reviewing and rationalising FDI norms in several verticals?

On Friday, the BSE Sensex vaulted by as much as 185 points to close at a gravity-defying 9870.79, within sniffing distance of a record busting 10K.

After consolidating for most of January, the Sensex and Nifty both appear to be making their move. Analysts reckon that the medium-term direction would be northward, given strong economic fundamentals. The RBI in many ways also acted as a catalyst for it re-rated the India's GDP growth for this financial upwards to anything between 7.5 to eight per cent.

Steelmakers boosted the Sensex on the back of Mittal Steel making a $22.3 billion takeover bid for the world's second largest steel company Arcelor, sparking hopes of better prices.

Tata Steel, SAIL and Essar Steel led the buying frenzy. For the month of January till date, the foreign institutional investors have invested $691 million in Indian equities. This was another sign that Indian markets are increasingly integrating with the rest of the globe. Moreover, Asian markets also ramped up significantly and Indian markets mirrored their bullish sentiment. A senior analyst reckons that PE multiples must catch up with earnings growth despite a sharp increase in the BSE Sensex.

First Published: Jan 28, 2006 19:45 IST