ECONOMY: Opening show holds out hope Sensex closes above 21000 – fundamentals still strong compared to the rest of the world, but political volatility looms while the Congress plays at sweeping corruption scandals under the carpet ?!!
FROM THE TELEGRAPH SPECIAL CORRESPONDENT
FORWARDED BY GORKHS DAJU
Mumbai, Nov. 5: Samvat 2067 began today with a bang as the BSE sensex closed above the magical 21000-mark for the first time in its history on hopes that inflows into India would continue to be robust following the second quantitative easing announced by the US Federal Reserve.
Propelled by blue chips such as the SBI, ICICI Bank and Hindalco, the 30-share index started the special muhurat session on Diwali on a positive note and surged 111.39 points, or 0.53 per cent, to 21004.96 against the previous record close of 20893.64 on Thursday.
During the session, the sensex hit 21108.64 — its highest level since January 10, 2008, when it touched 21206.77. Market circles, however, had expected the sensex to breach the January-2008 level. This is the fourth time in its history that the 30-share index has crossed the 21000-mark, and the first time it stayed put at that level.
The NSE Nifty ended at 6312.45 points today, its best-ever close. The Nifty is just 44 points shy of its highest-ever level of 6357.1 on January 8, 2008.
The market has rallied by over 5,000 points since last Diwali on October 17 with market capitalisation rising Rs 20 lakh crore.
The mood at the convention centre on the first floor of the BSE was one of cautious optimism with market experts pointing out that though equities may be ripe for a correction, it can come back to the bullish ways considering the growth prospects of the Indian economy.
Aniket Bharadia, who looks after institutional equity at Wallfort Financial Services, a member of the BSE and the NSE, told The Telegraph that while some correction could be in the offing, the index might even hit the 27000-mark next year. “There could be a minor correction but as the Indian economy will see a strong growth, this will have a positive impact on corporate India,’’ he said.
Sectors such as textiles, fertilisers and energy could turn out to be the major outperformers this year, he said. Bharadia’s colleague Aditya Maheshwari felt there would be stock-specific movements from now.
Experts felt that foreign institutional investors (FIIs), who have so far pumped a record $24 billion in this calendar year (of which $6 billion came in October alone), will continue to look at emerging markets such as India after the US Fed’s decision on quantitative easing that involves buying $600 billion of US treasury securities.
Dinesh Thakkar, chairman and managing director, Angel Broking, said liquidity could continue to chase emerging economies such as India, China and Brazil.
Thakkar said current prices looked expensive by 10 per cent compared with historic valuations. However, strong corporate earnings were one of the major factors that supported a positive outlook for domestic equities.
Thakkar is bullish on banking as he feels that the sector will continue to benefit from the sustained growth in the Indian economy.
“When the economy grows in a sustained fashion, it will have a positive impact on banks’ asset quality with lesser provisions and non-performing assets. Banking remains our top favourite. Some of the other sectors that we prefer include capital goods and information technology.’’
The muhurat trading marks the beginning of the new trading year for the Gujarati community, who form the bulk of the share brokers in India.
The State Bank of India rallied nearly 2 per cent today to hit a lifetime high of Rs 3,497 during the session, before ending at Rs 3,489.50.
However, Jaiprakash Associates was the biggest gainer, jumping 4.37 per cent, while Hindalco rose 2.72 per cent.
Other major gainers include M&M, which advanced 1.69 per cent, HUL (1.31 per cent), ICICI Bank (0.59 per cent) and TCS (0.75 per cent). Index heavyweight Reliance Industries rose 0.20 per cent to settle at Rs 1,106.95.
Barring Jindal Steel, Tata Power and L&T, the other companies in the 30-share sensex pack ended with gains. All 13 sectoral indices on the BSE finished in the green, with pharma, auto and bank stocks leading the pack.
Coal India Ltd, which made a big-bang listing debut yesterday, saw further buying and ended at Rs 349.65, higher by 2.1 per cent. In just two trading sessions, the scrip has gained nearly 43 per cent over the IPO issue price of Rs 245 per share. Among the sectoral indices, it was the BSE healthcare index that led the list of gainers, followed by the auto and banks.
Precious metals hit new highs – still the safest bet with Dec 21, 2012 doomsday scenario not over yet ?!!
FROM THE TELEGRAPH BUREAU
Nov. 5: In a welcome start to Samvat 2067, gold and silver prices jumped to their all-time highs today.
Standard gold (22 carat) — the benchmark in jewellery — staged a comeback after a brief lull to reach a historic high and within a striking distance of the magical Rs 20,000-mark.
In Mumbai, standard gold spurted Rs 285 to end at Rs 19,920 per 10 gram from the overnight closing level of Rs 19,635. Pure gold (24 carat), on the other hand, shot up Rs 280 to Rs 20,015 per 10 gram from Rs 19,735 yesterday. In Calcutta, 22-carat gold surged to Rs 19,105 per 10 gram from the previous close of Rs 18,935. Pure gold was up Rs 175 to Rs 20,135 per 10 gram from Rs 19,960 yesterday.
Silver also sizzled in the Calcutta market and closed at Rs 39,000 per kg, up Rs 1,250 from yesterday’s close. In Delhi, silver spurted by Rs 1,300 today to Rs 38,900 per kg, a level never seen before, while pure gold jumped Rs 250 to Rs 20,100 per 10 gram, just Rs 20 shy of the record price of Rs 20,120 reached on October 15.
Trading sentiment turned extremely bullish as stockists and jewellers purchased heavily to get off to an auspicious start in Samvat 2067.
The spurt in bullion prices in the domestic market has been fuelled by cues from the overseas markets.
In New York, gold rose to $1,394.60 a troy ounce yesterday, surpassing its previous historic high of $1,387 on October 14 this year. In the international market, silver settled at $26 an ounce yesterday, its highest level since March 1980. International rates dictate the prices of the yellow metal in the domestic market.
Prices of precious metals have been firming up since September when the US Federal Reserve started talking about the second round of quantitative easing.
On November 3, when the US Fed announced that it would buy back treasury bonds worth $600 billion over the next eight months to boost the US economy, it immediately led to a depreciation of the dollar against almost all major currencies, including the rupee.
Since gold price in the international market is dollar denominated, the price of the yellow metal in the global markets started moving up.
A depreciating dollar also prompted global investors to look for a safe haven in gold that further fuelled the rise in the prices.
“The recent run-up in gold prices is exclusively dollar-driven,” said a commodity analyst with brokerage house Karvy Comtrade.
“The US dollar is likely to depreciate at least in the short-run post the quantitative easing,” said a senior forex analyst with HSBC.
Hence, gold prices are likely to inch up further.
Silver prices have already hit a 30-month high in the international markets. “Silver is expected to touch the Rs 40,000-mark very soon,” said Sanjiv Kejriwal, director, Gold Silver Arts.