The Hindu : Business : Sensex touches 10000

Online edition of India's National Newspaper
Tuesday, Feb 07, 2006

Business

Business

Sensex touches 10000

Special Correspondent

`The liquidity position of the market continues to remain strong'

BUOYANT MOOD: An investor outside the Bombay Stock Exchange building on Dalal Street is jubilant as the Sensex soared to a new landmark on Monday, crossing the 10,000 points mark. This marks the culmination of an over 20-month rally that began in May 2004 and which saw the index breaching the 8,000 mark on September 8, 2005. — PHOTO: PAUL NORONHA

MUMBAI: The benchmark stock index on Monday breached the 10000-mark for the first time, as foreign institutional investors (FIIs) poured funds to buy Indian stocks.

The Bombay Stock Exchange (BSE) 30-Share Sensitive Index (Sensex) rose by 260.25 points, or 2.7 per cent, to 10002.83 in the last hour of trading, before closing at 9980.42. The index has so far risen by 6.2 per cent this year, following a gain of 42 per cent in 2005.

"The market touches the magical figure of 10,000 on a day when the expectations are not so bullish. It is a great feeling to know that the benchmark index has touched the five-digit figure. While volatility can be seen in the budget month, liquidity flows and global market condition will drive the market for the next few weeks,'' said Deepak Jasani, Head, Research (Retail), HDFC Securities.

Robust growth in economy

The Sensex closed above the 9900 level on January 31, and has now hit the 10000-mark. The rise in from the 3000 level in 2003 to its current position has been on the back of a robust performance by India Inc. The country has witnessed record FII inflows consecutively in the last three years; with 2005 being the highest — in excess of $10 billion.

"FIIs have invested in large caps followed by mid-caps and have played a role to push the Sensex,'' Sandeep Sharma, Head, SG Private Banking, India.

Also, in 2005, the Sensex crossed 7000, 8000 and 9000 decisively.

Corporate India continues to shine — last year net profits rose by 28.9 per cent while sales grew by 19.5 per cent.

In the latest third quarter results, Sensex companies grew by 18 per cent and 19 per cent in sales and profits, respectively.

"The liquidity position of the market continues to remain strong,'' said Mr. Sharma. Close to a dozen new fund offerings (NFOs) are flooding the market in the first two months of the calendar year — the funds of which would be deployed in the markets over the subsequent months.

The Blue Chip Fund by SBI has garnered Rs. 3,500 crore, which is likely to be deployed in large cap stocks.

"The overall visibility of growth is good. Valuations are no longer cheap. Investors should ignore the so-called landmark levels. And focus on long term investing and they should have realistic expectation going forward,'' said Tridib Pathak, Chief Investment Officer of Chola Mutual Fund.

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