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Destination Point 5000: upbeat mood may catapult Sensex to new highs

M P Joshi in Bombay

The current boom in the stock market would go down in the history books of the Bombay Stock Exchange and the National Stock Exchange as the most spectacular one, paling several rallies of the past.

The BSE, with its history of 125 years, has seen many ups and downs. Rallies more often than not were short-lived since they are controlled by bears and bulls.

The market experts and fund managers have attributed the current rally to the end of Kargil conflict and it coinciding with economic revival. According to them, the increase in the demand in the economy-related sectors like cement, steel, automobiles has made the market players buy heavily in anticipation of future gains.

Notwithstanding the above factors, the spurt in global oil prices sent the petro stocks to dizzy heights in the current rally.

The analysts says, the 30-scrip Sensitive Index or Sensex of the BSE, after surpassing the historic peak of 4643 and touching a new high of 4678 during the intra-day trading on July 12, is now headed for new highs in the coming days.

The market witnessed a 223-point jump by the Sensex on July 11. It was one of the 14 such big, single-day jumps recorded by the exchange in its history.

The Sensex recorded eight single-day rallies which includes the 493-point, single-day jump on March 30, 1992. No such record of the Sensex gaining more than 200 points was noted in 1993 but there were two such occasions in 1994 when the index saw over 200-point jumps in a single day.

1995 and 1996 also went without such a single-day jump while in 1997, the Sensex shot up by 205.58 points on March 1. There was also a single occasion in 1998 when the Sensex posted single-day jump of 239 points on June 17 and then twice in 1999 on April 16 and July 12.

The Sensex which had a base of 1978-79 comprising 30 scrips from the specified and non-specified categories of the listed companies on the exchange came into force from January 2, 1986. It has played a great role by reflecting the picture of country's economical strength, says Manoj Vaish, BSE director.

On being asked, Lallubhai Nagardas, the 82-year-old stock broker and former president of the BSE, said he had not seen as big a rally as the current one, in his 60 years of professional career.

However, he agreed that there was a rapid growth after the introduction of online trading network and the recent expansion of BOLT terminals across the country. But, he said, ''If you ask me about the the record rallies, this is nothing, we have seen the Tata-D scrip going down by Rs 1,000 to Rs 1,400 from Rs 2,400 in '40s when there used to be a monthly settlement.''

Nikhil Vakharia, representative of the younger generation at the Kanchalal and Sons, a Bombay-based broking firm, appreciates the current rally and links it with the economic revival and firmly believes the Sensex would touch 4,800 points soon.

Nagardas, who was the President of the BSE in 1986-87, is still happy with the change of front-runners from old favourites like textile, steel shares to infotech, pharma and FMCG.

Raman parikh, another veteran member of the premier bourse, said that the days are gone in the capital market when the market was driven by the punters or domestic investors. Now it was totally driven by foreign institutional investors. Whenever the FIIs actively participate in the market, the bull run is noticed; in their absence, the market has to face the bearish spell.

In a chat with mediapersons recently, the BSE president Anand Rathi -- he will interact with Rediff's readers in a live chat on July 16 at 2000 hrs IST -- too made suggestions that the government should allow the banks to invest at least one per cent of their deposits into the capital market so that the sudden shock treatments could be avoided.

Rathi also forwarded his suggestions to the finance ministry for necessary action.

Commenting on the current rally and the FII focus, Vasudeo Joshi, assistant director at Jardine Fleming Asset Management Company, said that the FIIs have concentrated in cyclical stocks rather than the current market favourites. He confirmed the FIIs are buying on clear indications of peace and political stability.

Joshi was hopeful that the current rally would continue for a longer time than expected, following signs of revival in economy and the continuous decline in the inflation rate after touching the 20-year low.

UNI

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