Bulls hoist Sensex over 20K

Apart from market scaling 32 month closing highs this day, firm global stocks, foreign institutional investors’ buying spree and robust second quarter advance tax payments from frontline firms underpinned sentiment.

 Analysts aver that FIIs played the biggest role in this rally meaning they were the net buyers to the tune of more than Rs 53,000 crore since June 2010 and buyers of more than Rs 75,000 crore in this calendar year. 

 Angel Broking CMD Dinesh Thakkar said: “Sensex gush past 20,000 mark, stands testimony to the attractiveness of India as a preferred investment destination.  With Indian economy structurally well placed for an 8-9 per cent GDP growth over long period, the Indian equities are in a structural bull run.  .....from a near term perspective, I would advice retail investors to hold on to their investments, while new investments into the markets should be staggered across, to maximize the overall returns.”

 Yet, despite the rise, the market breadth which was weak, as small and mid-cap stocks underwent correction. Cigarette major ITC, banking pivotal HDFC Bank, software pivotals TCS and Infosys, tractor and utility vehicles giant Mahindra & Mahindra and truck major Tata Motors, all struck record highs in intra-day trade, while FMCG shares declined on profit booking.

The BSE Sensex rose 95.45 points or 0.48 per cent to close at 20,001.55, which is its highest closing level since January 15, 2008. The index gained 182.86 points at the intra-day’s high of 20,088.96 and lost 45.22 points at the day’s low of 19,860.88 in mid-morning trade.  The broader based S&P CNX Nifty was up 28.60 points or 0.48 per cent to 6,009.05, its highest closing level since January 15, 2008.  Nifty struck a high of 6,032.80 in early trade.

Broader market wise, the BSE Mid-Cap index fell 0.98 per cent and the BSE Small-Cap index fell 1.34 per cent, both underperforming the Sensex.

The market breadth, indicating the health of the market was weak, in contrast to strong market breadth in opening trade, with as many as 2182 stocks on BSE declined while 903 scrips advanced and a total of 76 shares remained unchanged.

The combined turnover of both the bourses stood at Rs 1,79.842 crore, including Rs 17,910.8 crore from the NSE cash segment, Rs 1,56,526.36 crore from NSE futures & options and the remainder Rs 5,404.84 crore from the BSE cash segment.

Overseas markets

During the day at overseas markets, Asian stocks were mixed as caution prevailed ahead of the US Federal Reserve’s monetary policy meeting on Tuesday. The key indices in Hong Kong, Singapore, China and Taiwan rose by between 0.11 to 0.47 per cent. However, indices in Indonesia and Japan declined 0.18 and 0.25 per cent respectively.  In Europe, the key benchmark indices in France, Germany and UK rose by between 0.38 to 0.6 per cent.

Trading in US index futures indicate that the Dow could rise 14 points at the opening bell on Tuesday and the key event to watch out for is US Federal Reserve’s monetary policy meeting on Tuesday, 21 September 2010, which will decide whether the US economy needs reinforced monetary crutches. It has already cut benchmark interest rates to near zero and pumped more than $1.7 trillion into the economy through purchases of Treasury and mortgage-related debt.

Closely watching equity markets: FM

The finance ministry, on Tuesday, said investors are confident about the economy but the government is keeping a close eye on the situation. The ministry also said overwhelming capital inflows at this point of time is not a concern and there are no signs of overheating. “We all know that the Sensex is always a little bit unpredictable. (But) I am happy that for the first time after January 2008, it has crossed 20,000 (points),” Finance Minister Pranab Mukherjee said.

Finance Secretary Ashok Chawla said sensex crossing the 20,000 points mark reflects the confidence of investors. He, however, added in the same breath that the government and market regulator Sebi are keeping a close tab. “We and Sebi are watching the capital markets,” Chawla said.