Another record, another feather in Sensex cap

A rally in bank shares, gains in cement shares and in cellular services major Bharti Airtel, lifted the BSE Sensex to another record closing high today. Firm global bourses and continued strong FII-inflow supported the domestic bourses, which have been breaking their own records almost every day now. An overnight surge in US stocks and a steep fall in US core producer prices, which eased worries of rate hike by the Federal Reserve, cheered markets across the world on Wednesday.

The Sensex gained a modest 43.87 points, settling at 13,469.37. The S&P CNX Nifty added 10.40 points (0.2%), to finish at 3,876.30. Both are lodged at life highs presently.

The market was volatile. The Sensex had lost about 35 points for the day, at one point of time in early trade, in contrast to an 80-point surge at the onset of the trading session. It had trimmed gains in late trading, after a new high of 13,506.08. It came off the higher level in the last half an hour of trade, mainly due to a weakness in index heavyweight Reliance Industries (RIL). The BSE Sensex swung 115.29 points for the day, between 13,390.79 and 13,506.08.

The market-breadth was weak. For 1,509 shares that declined on BSE, 1,035 rose. As many as 69 shares were unchanged. Losers outpaced gainers by a ratio of 1.45:1. Although the Sensex has been hitting a string of new highs, what has been lacking is participation from across the board. The market-breadth has failed on a few occasions recently.

The BSE clocked a turnover of Rs 5,088 crore, compared to Tuesday’s Rs 5,151 crore.

Revision in earnings estimates by brokerages for companies following strong Q2 results has fuelled a surge in FII inflow in the past few weeks. FII-inflow for calendar 2006 has reached $7.5 billion (till 13 November) compared to a record inflow of $10.7 billion in 2005. Another factor that has contributed to the surge in FII inflows, is the the ever growing number of FIIs getting registered with Sebi every day. Since January this year, there has been an addition of over 150 FIIs, and the aggregate now stands at 978. Strong global liquidity has aided the fund flow.

A section of the market attributes the solid surge on the Indian bourses to increasing recognition of India’s long-term growth prospects. From 4,644 on 23 June 2004, it has galloped 190% in less than two and a half years.

Bank shares surged today due to easing interest rate worries, and as 10-year bond prices scaled a six-month high on Wednesday. State Bank of India jumped 4.6% to Rs 1,179. The stock also struck a record high of Rs 1,184.40. RBI on Tuesday said the recent fall in global crude oil prices should help ease inflation pressures.

ICICI Bank gained nearly 3% to Rs 880. The stock hit Rs 888, a lifetime high. ICICI Bank was also boosted by reports that RBI has permitted the largest private sector bank to open new branches and off-site ATMs. BSE banking sector index, the Bankex, hit an all-time high.

Bharti Airtel gained nearly 2% to Rs 580.95. The stock hit Rs 582.50, a lifetime high for the scrip. It has replaced TCS as the fifth largest company in terms of market-cap today.

Reliance Industries shed 1.3% to Rs 1,260. Motital Oswal Securities has downgraded the stock. It is the second brokerage after Kotak Securities to downgrade the scrip, citing stretched valuation.

FMCG giant Hindustan Lever shed 1.8% to Rs 243.30. A large block deal of 10 lakh shares was executed in the scrip at Rs 243.80 per share, on BSE.

MTNL jumped nearly 7% to Rs 142.60, on a whopping 28.3 lakh shares on BSE. Following a clarification by the Income Tax Department on treatment of license fee, MTNL is set to pocket Rs 1,800 crore as refund -- principal of about Rs 1,400 crore and Rs 400 crore as interest.

Cement shares rose on firm cement prices. Gujarat Ambuja Cements gained 2% to Rs 138.05, UltraTech Cement added 1.4% to Rs 914.85, ACC rose 1.3% to Rs 1,021 and Grasim added 1.3% to Rs 2,708.

Software major Infosys Technologies also gained in volatile trade. The stock rose 0.7% to Rs 2,227. On Tuesday, its ADR rose 2.4% to $56.50. Investors are keenly watching the trend in Infosys' ADR as pricing of the issue will be linked to the ADR's ruling market price.

ONGC ended flat at Rs 880. The stock had risen 1.6% in opening trade, to 894.70, amid media reports that ONGC Videsh, the international arm of ONGC, had struck oil in an Iranian block.

Airlines rose on reports of airlines gearing to raise airfares between 3 - 5%. Jet Airways rose 3.6% to Rs 656. Among low cost airlines, Deccan Aviation jumped 10% to Rs 119 and SpiceJet added nearly 5% to Rs 47.30.

Real estate developer Mahindra Gesco Developer jumped 20% to Rs 952.85. The stock rose on heavy volume of 35.1 lakh shares on BSE.

OCL India rose nearly 7% to Rs 178.95. Two large block deals of 9.9 lakh shares and 12.3 lakh shares, were executed on BSE at Rs 173 per share.

Glenmark Pharma jumped nearly 15% to Rs 584.35, extending its recent solid surge. As per reports, the new drug policy will extend tax benefits on pharma R&D till 2015, which will benefit research focused companies like Glenmark. The scrip rose on high volume of 29.4 lakh shares on BSE.

Arvind Mills lost 1.2% to Rs 54.30. The National Stock Exchange (NSE) has barred fresh FII positions in the derivatives segment in Arvind Mills as such positions in the scrip have crossed 95% of the market wide position limit.

i-flex solutions shed 0.4%, at Rs 1,520. Financial Services (FSI) said on Tuesday, it will now offer Flexcube, the core banking solution from i-flex, as a hosted offering to community banks in the United States.

Though there has not been an across the board rally in stocks in the recent market surge, small-cap and mid-cap stocks have surged on a selective basis in the past few days.