Sensex, Nifty strike record closing highs

The market was on the ascent for the second day in a row today. A rally in select blue-chips triggered an over 100-point surge in the BSE Sensex today. It was the second day in a row that the barometer index clocked a triple-digit gain. Strong FII-inflows and a brokerages' revision in earnings estimates, have fuelled the latest bull-run on the bourses.

The 30-share BSE Sensex jumped 116.09 points (0.87%), to settle at 13,399, a lifetime closing high. The BSE Sensex also hit 13,410.08, which is an all-time high for the scrip.

The S&P CNX Nifty rose 24 points (0.63%), to end at 3,858.75, a lifetime closing high.

Select small-cap and mid-cap shares surged in continuation of the recent trend. The last few days have seen a surge in small-cap and mid-cap stocks on a selective basis as their valuations have turned attractive vis-à-vis the frontline shares.

The BSE clocked a turnover of Rs 3,925 crore compared to Friday (10 November’s) Rs 4,568 crore.

Expecting the momentum of earnings growth to last, FIIs have stepped up buying. Strong global liquidity has aided the surge in inflows. By the first few days of November 2006, FII inflow has reached Rs 2,237.90 crore (till 9 November). In October-2006, when corporate reported their earnings on the bourses, foreign investors sent in Rs 8,013 crore compared to Rs 4,643 crore in August and Rs 5,428 crore in September. FII-inflow in calendar 2006 stands at $7.14 billion. In calendar 2005, FII inflows stood at a record $ 10.7 billion. For Q2 September 2006, the aggregate net profit of 3,096 companies surged 46.7% to Rs 52,272 crore, a 30.8% growth in net sales (sales include other income for banking and finance firms) to Rs 5,14,841 crore.

In its recent `Greed & Fear’ series, Credit Lyonais Securities Asia-Pacific Markets has said that the rerating of the Indian stock market over the past three years, has been justified by the strong earnings growth. The barometer BSE Sensex is up 42.5% in calendar 2006 so far. The market has soared in the past two years. From 4,644 on 23 June 2004, it has galloped 188.5% in less than two and a half years.

For the Indian economy the report states that since the country is witnessing a secular pick up in growth, time will not be too far when country it will exceed China’s growth rates. The report also states that India could be growing at 9% plus on a trend basis, based on the anticipated strength of the investment cycle, which has very positive implications for earnings growth.

A section of the market attributes the solid surge on the Indian bourses to increasing recognition of India’s long-term growth prospects. India’s growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation. Prime Minister Mahmohan Singh has promised a complete policy on infrastructure, including regulatory and institutional framework, to make it attractive for private participation in the near future.

The CLSA report, however, accepts that the market is no longer cheap. The Indian market continues to trade at a premium over its regional peers. The premier BSE Sensex trades at a PE multiple of 21.7, based on its trailing 12-month September 2006 earnings.

In today’s trade, Infosys rose 1.2% to Rs 2,165.30. The stock reached Rs 2,170, a lifetime high for the scrip. The stock had firmed up after shareholders recently approved the proposal for a sponsored ADR issue.

NTPC jumped 5.5% to Rs 137.85, while Reliance Energy rose 2.9% to Rs 536.

Cellular services major Bharti Airtel rose 4.6% to Rs 569.10. The stock hit Rs 570, an all-time high for the scrip. Bharti Airtel said on Monday it was roping in Microsoft Corporation, to offer software and other services to small and medium scale businesses in India.

Reliance Communications (RCL) rose 3% to Rs 403.50. The stock also hit Rs 404.40, a lifetime high for the scrip. RCL and state-run BSNL, have entered into an agreement enabling subscribers to access 1-800 numbers or toll free numbers provided by either operator. The toll free numbers help consumers call their suppliers or service providers without incurrring any extra charge.

Housing finance major HDFC jumped 4.6% to Rs 1,565.

Zee Telefilms rose 3% to Rs 341, after it bought 50% stake in Dubai-based Taj Television's Ten Sports channel for an undisclosed sum.

Tata Motors gained 2% to Rs 835. As per reports, Italy's Fiat plans to make Tata Motors' new 1-tonne, pick-up truck at its plant in Argentina. Car major Maruti Udyog rose 0.4% to Rs 912. Maruti is seen benefiting from upgradation by two-wheeler owners as per a recent survey.

HDFC Bank rose 1% to Rs 1,055, and ICICI Bank gained nearly 1% to Rs 840. Private sector banks have been on an upmove following earnings upgrade for FY 2007, by brokerages following strong Q2 results.

Index heavyweight, Reliance Industries (RIL), failed to capitalise on today's rally. The stock was flat at Rs 1,287.15, and fluctuated within a narrow range.

Jaiprakash Associates jumped 5% to Rs 671, extending its recent surge after a court order which paved the way for the company's land development projects.

Forbes Gokak jumped 20% to Rs 565.50, after the company said it had constituted a committee of directors to examine possibilities of restructuring.

Though Blue Dart Express ended flat for the day at Rs 605, it was gripped by volatility. It hovered between Rs 565 and Rs 629.50. Its parent DHL Express has decided not to pursue delisting. The reverse book-building for the purpose of determining the exit price ended on 10 November 2006, and the price determined as per this formula was Rs 950. Although DHL has not specified the reason for not proceeding with the delisting offer, it appears that the parent perceives the exit price of Rs 950 too stiff vis-a-vis the ruling market price (Rs 605).

The price discovery in Blue Dart at Rs 950 much above the ruling market price of Rs 600, lifted another logistics firm Gati. The stock jumped 12.9% to Rs 98.50.

Shree Cement jumped 10% to Rs 1,459.20, extending its recent upmove.

Tyre shares rose on renewed buying. MRF jumped 10% to Rs 4,497.70, CEAT gained 9.5% to Rs 126.80, JK Industries advanced 5% to Rs 128.15, Goodyear India added 5% to Rs 168.70 and TVS Srichakra gained 3.9% to Rs 125.10.

Computer maker HCL Infosystems rose 3.8% to Rs 164.35 after the company secured a Rs 591 crore order from state-run Bharat Sanchar Nigam to provide network facilities for a project.

PBA Infrastructure jumped 10% to Rs 133, after it got orders worth Rs 101 crore for road projects from the Jammu and Kashmir Government.

Oil and gas services company Deep Industries jumped nearly 10%, to Rs 34.85 after it received rig and compression services orders worth Rs 16.50 crore from state-run ONGC.

Software services provider iGate Global Solutions rose 3.8% to Rs 240.75, after it said it had signed a three-year technology services agreement with Radian Group.

Usha Martin rose 4% to Rs 177.05, after the wire rope maker said its joint venture with Germany's Gustav Wolf will start manufacturing tyre beads and expand its steel cord capacity.