Sensex scorches the charts, powers its way past 11,000

BSE, NSE Combined Turnover At Six-Month High

SOFTWARE major Infosys Technologies’ lowerthan-expected revenue guidance for 2009-10 proved to be no deterrent for investors in Indian equities to go slow on their frenzied buying. Extending gains to the eighth straight session, the benchmark Sensex on Wednesday ended above the 11,000-mark for the first time in six months, outperforming markets in Asia and Europe.
    Though some money managers are reacting cautiously to the ongoing buying rage, optimists are taking heart from the fact that the rally has been backed by better volumes. Total turnover on both exchanges —the Bombay Stock Exchange and the National Stock Exchange combined crossed Rs 1 lakh crore, the highest in over six months.
    Continued buying in mid- and small-cap shares contributed to the sharp pick-up in volumes, with almost 499 stocks in the ‘B’ group segment on BSE frozen at the upper circuit in Wednesday’s session. BSE’s mid- and small-cap indices rose 3.95% and 5.32%, respectively, outperforming the Sensex’s rise of 317.51 points, or 2.9%, to close at 11,284.73.
    “Many funds that could not catch the market’s bottom are becoming active and resorting to aggressive buying,” said Deepak Sawhney, head-research, Networth Stock Broking.
    On Wednesday, foreign institutions’ net purchases of Indian shares touched Rs 685 crore, according to provisional BSE data. So far this month, they have been net buyers to the tune of over Rs 3,000 crore. Their domestic counterparts infused Rs 290 crore on Wednesday. Brokers said investors are shifting out of large-cap stocks to ride the mid- and
    small-cap frenzy. But the trend has triggered
    concerns on whether the sharp run-up may be justified or not.
“Markets are fairly valued at these levels and any further move will stretch the valuation. Unless the earnings figures change, price-to-earnings ratio will look to be stretched,” says Manish Sonthalia, portfolio manager at Motilal Oswal Financial Services. “Investors should remain cautious at these levels,” he adds.
    Infosys indicated a 4.1% decline in US dollar revenue for 2009-10, while its Q4 earnings missed forecasts. Shares of software companies ended weak on Wednesday, with BSE’s IT index falling close to 2%. Mr Sawhney feels banking shares would continue to rise in the coming days ahead of RBI’s monetary policy next week, when it is expected to cut interest rates.

 

 

 

 

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