Sensex ignores IIP numbers

Brushing aside numbers suggesting that the economy could be slowing down, bulls came out in full force on Thursday. Setting aside a two-day losing streak, indices registered handsome gains on the back of bottom fishing in construction, auto and software shares.

“Market brushed aside a dip in IIP figures as it realised that the numbers were on a higher base and fundamentals were still intact,” says Niche Brokerage head of research Priyadarshi Srivastava.

He does not sense any negative mood in the market, but warns that the action will be range-bound. Dealers say the market is awaiting the outcome of the US Fed’s meeting in the coming week and there are strong expectations that it would go for a cut in its benchmark interest rates.

“Players have been waiting for the next positive trigger. We, however, believe that a 25 basis point cut by the Fed has already being discounted by the market,” Mr Srivastava said. While BSE 30-share Sensex gained 109.08 points, or 0.70%, to end at 15,614, the S&P CNX Nifty rose 32 points, or 0.71%, at 4,529. Intra-day, the Sensex hit a high of 15,650.

The Nifty September 2007 futures settled at 4,527, a marginal discount of 1.95 points compared to the spot closing. This discount has narrowed over the past trading session while the open interest has gone up, indicating bullish undertones.

There was also good buying in second-line shares as indicated by strong gains in the mid-cap and small-cap indices. “Reliance companies, both the groups, have been doing extremely well in the past few sessions, sending both frontline and mid-cap indices higher,” says a broker with a domestic brokerage. For instance, India’s largest private sector company by market capitalisation and oil refiner Reliance Industries (RIL) ended the day much above the 2,000 levels at Rs 2,025 on strong volumes.

The stock edged higher after the empowered group of ministers (EGoM) approved RIL’s pricing formula for its gas from the Krishna-Godavari (KG) basin, much in line with what the company sought. Reliance Communications, the county’s second-largest listed cellular services provider in terms of revenue, gained 1.86% to Rs 552.15.

As per reports, FLAG Telecom Group (FLAG) reportedly bagged a contract from European Organisation for Nuclear Research to provide gigabit connectivity. Other Reliance shares also registered gains. Another group of stocks that were in action were the real estate and construction stocks.

These advanced on fresh buying led by Unitech which surged 7.72% to Rs 285.55 on news that it would replace IPCL in 50 share S&P CNX Nifty soon. Other real estate shares like DLF, Parsvnath Developers, Orbit Corporation and Omaxe all advanced between 1 and 4%.