Market rally limited to handful of stocks

Mumbai, May 22 | Updated: May 23 2007, 05:30am hrs
The mood is upbeat in the Dalal street as the Sensex of Bombay Stock Exchange (BSE) is just a few hundred points away from another life-time high, and S&P CNX Nifty of National Stock Exchange (NSE) has touched its all-time high level. Nifty closed the day at a new high of 4,278.10, with a gain of 0.40%, or 17.2 points. The Sensex too edged higher by 35.12 points, or 0.24%, to settle the day at 14,453.72 points.

Unlike the previous rallies, the current rally is not broad-based and is just confined to a few select stocks among the Sensex constituents, which has become a cause of concern among the market players. The stock market is rising continuously since May 10 following impressive performance registered by stocks like Reliance Industries Ltd (RIL), Reliance Communications (R Com), Reliance Energy Ltd (REL), SBI, ICICI Bank, HDFC Bank, Tata Steel and BHEL. These stocks together command a weightage of 40.37% in the Sensex while companies belonging to Mukesh Ambani and Anil Ambani which constitute the Reliance pack has 18.25% weightage in the Sensex.

RIL has gained 12.25%, SBI 17.90%, and R Com 12.60%. HDFC Bank, ICICI and BHEL were up by around 10% since May 10 while the Sensex has gained 4.96% during the same period.

On the other hand, frontline IT stocks like Infosys, Satyam, Wipro and TCS who had a major contribution in the Sensex's previous rallies from 10K to 12K and further up towards the 14K remained subdued throughout this period. Analysts attribute this to the rising rupee. This development, according to them, will have a direct impact on these companies, as most of their income is derived from exports.