Equities set new highs

Equity indices scaled new highs Wednesday as investors remained bullish even after the sharp climb Tuesday. Analysts maintain the market is in an overbought zone, but given the rate of fund flows, it is quite likely the run up will continue.

With the immediate term targets crossed, only a slowdown in earnings of blue chip companies could reduce the momentum, said Hitesh Sheth, head of research at Prabhudas Lilladher.

“All eyes are on Infosys Technologies; we expect a positive report from the company. Market has discounted the rupee appreciation, which hurt the company's margins last quarter,” he said.

IT Index was one of the biggest sectoral gainers on the BSE, closing higher by 3.25 per cent at 5,049. Infosys (up 3.74%), Satyam Computer (2.91%), Wipro (2.83%) and Tata Consultancy Services (2.6%) were amongst the biggest gainers.

Capital goods shares also advanced ahead of earnings as investors are optimistic on the sector in keeping with the India growth story. Larsen & Toubro shot up 6.6 per cent and BHEL rose 4.2 per cent on news of the conglomerates bagging new orders.

Bombay Stock Exchange's Sensex finished 2.07 per cent or 378 points higher at 18,658.25, making an all-time high of 18,703.67 before the close.

National Stock Exchange's Nifty closed 2.14 per cent or 114 points at 5,441.45. The index touched a life time high of 5454.7.

As the indices defy fundamentals and go on to make new highs almost every session, there is cause for concern. “The market is vulnerable at these levels; people are finding it difficult to exit at current levels. Any negative news on the political front will cause damage,” Hitesh Sheth said