Monday, Jan 05, 2004
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THE STOCK markets witnessed unabated buoyancy last week with the Sensex (the benchmark 30 share sensitive index) touching a historic high of 6026.59 at the close after witnessing an intra-day high of 6034.38. In the last six weeks alone the index had recorded a rise of 1190 points or 24.6 per cent. On the National Stock Exchange, the S&P CNX Nifty ended the week at a new high of 1946.05, registering a gain of 109 points.
The new year has started on an encouraging note thanks to continued buying by foreign institutional investors along with domestic mutual funds and institutions. Unlike in the boom of February 2000 when IT stocks contributed most to the rally, the current boom has seen participation by all sectors. Also, most of the buying is delivery based and there is reluctance on the part of investors to sell even at the higher levels. Though a correction is overdue, the sustained emergence of fresh buying may keep the market steady in the coming week in the absence of sellers.
Stocks of auto components, oil and refinery, metals, cement, power companies and banks were in demand. The upward movement was led by heavyweights such as Reliance, Oil and Natural Gas Corporation, ITC and Larsen & Toubro. The undertone is extremely bullish. Stocks of the FMCG sector joined the bandwagon later in the week by posting marginal gains.
Software companies may attract buying interest in the coming weeks as many of them will be coming out with their third quarter numbers.
Oil and gas stocks were in the limelight. Indraprastha Gas (IGL), after listing at 150 per cent premium over the IPO price on December 26 finished 24 per cent higher at Rs. 148.30 on Friday.
In the fertilizer segment, rumours that the Government would speed up the disinvestment process of Rashtrya Chemicals helped the counter to close higher by 22.2 per cent to Rs. 47.05. Chambal Fertilizers, GNFC and GSFC were also in demand. Among banks, Bank of Baroda, Vijaya Bank, UCO Bank and IOB attracted investment buying.
Power sector companies registered further gains on sustained buying. Reliance Industries went up by 10.4 per cent to Rs. 585.70 with a positive outlook in petrochemicals.
Shipping stocks attracted keen buying in anticipation of impressive performance.
Foreign institutional investors (FIIs) have invested over Rs. 35,100 crores ($7.59 billion) in the Indian debt and equity markets in 2003, a record for a single year. Market circles expect a higher allocation by FIIs in the current year.
Interest rates steady
Interest rates were steady last week. The 10 year government security was treaded at 5.10 per cent and the five year security at 4.73 per cent. The year on year inflation moved up to 5.63 per cent as on December 20.
Thin trading in forex markets
With the holiday season just ending, activity will pick up in the international markets. However, last week saw thin trading which heightened the usual demand and supply factors in India.
Opening at 46.50 to a dollar the rupee closed at 45.70 crossing into the new year. The relatively sharp fall in the rupee however may not set a trend as trading volumes increase in the new year. The stock market has been extremely bullish and that remains a positive factor for the rupee.
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