Robust start for Indian equities in New Year


Mumbai : Trading in Indian equities began on a positive note in the New Year with a key market index closing on a record high during the week ended Friday, backed by strong purchases by foreign funds and the buzz created by Reliance Power’s upcoming $2.75 billion public offer.

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The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) scaled new peaks during the week and ended at a record closing of 20,686.89 points, after topping an all-time high of 20,762.80 points during intra-day trading Friday.

In the process, the 30-share index ended with a gain of 479.94 points, or 2.38 percent, during the week, taking its month-long rise to 5.93 percent and the 52-week advance to just under 50 percent.

The broader 50-share S&P CNX Nifty of the National Stock Exchange also spurted 136 points or 2.21 percent and also closed at a record high of 6,274.30 points, data with the exchange showed.

Looking ahead, analysts expected the markets to remain strong, given the good third-quarter corporate results expected from the corporate sector and strong fundamentals of the economy.

“The strong message from the finance minister (P. Chidambaram) who has asked all commercial banks to look at cutting interest rates by around 50 basis points is also expected to boost sentiments,” an analyst with a leading brokerage said.

The mood has also been upbeat after the market regulator Securities and Exchange Board of India (SEBI) said Wednesday institutional investors could start short-selling on Feb 1, revoking the ban in place since the major stock scam of 2001.

Investors were keenly awaiting the $2.75 billion initial public offer (IPO) of Reliance Power, an associate of Anil Dhirubhai Ambani group’s Reliance Energy, which is slated to open Jan 15.

The buying interest in Indian equities was also complemented by foreign funds, which made net purchases worth $352.30 million during the first four trading days of the New Year, keeping up with the momentum of the past few months.

Despite a strong performance of the Sensex, a representative index of 30 shares, the week belonged to small-cap shares, with a specific index for such counters gaining 7.62 percent during the week.

Mid-Cap stocks also performed well, as evidenced by the 5.62 percent gain in the index for such counters – far outperforming the 2.38 percent gain made by the Sensex.

Among the sector-specific indices, that for the stocks of state-run firms gained the most with 8.28 percent, followed by 7.80 percent in the sub-index for power stocks and 6.30 percent for fast-moving consumer goods.

On the other hand, the index for information technology stocks lost 5.12 percent and the other for technology stocks dropped by 0.98 percent, data available with the BSE showed.

The top gainers during the week among the 30 Sensex shares included ICICI Bank, Larsen and Toubro, Hindustan Unilever, Reliance Communications, and Hindalco. The losers included NTPC, Mahindra and Mahindra, Cipla, Ambuja Cements and Tata Consultancy Services.