BSE Sensex scales new peak on sustained foreign inflows

Mar 28 2014, 08:45 IST
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SummaryBanking, oil and gas shares shine amid hopes of recovering economy.

The BSE benchmark Sensex vaulted to a fresh lifetime closing high of 22,214.37 points on Thursday on sustained foreign inflows amid expectations that the economy could be on the recovery path and a stable government would take charge at the Centre after the elections.

Led by State Bank of India (SBI), the Sensex touched all-time high of 22,307.74 intra-day, which is the fourth day in succession that the key index has risen to record high levels intra-day.

The barometer moved for most of the day in the positive terrain before settling at 22,214.37, up 119.07 points or 0.54 per cent from its previous close. The NSE Nifty rose by 40.35 points or 0.61 per cent to end at a new peak of 6,641.75. It recorded a historical intra-trade high of 6,673.95. “There is a strong momentum in the market which refuses to slow down. Overall activity in the market has risen as visible from heightened action in small- and mid-cap stocks. The index should take a breather post expiry but broader market momentum should sustain. FIIs continue to buy in anticipation of the change and hence downside remains protected till the poll verdict is made,” said Vinod Nair, head-Fundamental Research, Geojit BNP Paribas Financial.

SBI led the rally among lenders after Goldman Sachs raised its recommendation on the bank which rose by 4 per cent to its highest level since December after the US investment bank advised investors to buy shares and increased its price target by 44 per cent.

A Deutsche Bank report said it’s not going to get carried away in this wave of political optimism. “Election cycles have come and gone over in the past decade or two, with the markets rallying exuberantly in the lead-up or aftermath of decisive electoral results. These rallies have almost inevitably fizzled though as the reality of running a large, complex, and noisy democracy set in,” it said.

“The market has run up so fast. There could be a correction. We have to wait and see whether it will come before elections or after that. Investors should be careful,” said BSE dealer Pawan Dharnidharka.

Indicating that dealers are bullish, the market witnessed higher rollovers and high roll cost during the expiry of March derivative contracts.

Besides the RBI’s policy review on April 1, where it is widely expected to keeps rates unchanged, investors say the forthcoming general elections would act as the next key catalyst for

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