MUMBAI: It was around the same time in 2006 when the Sensex had touched the 12,000-mark for the first time in its history. And now, it’s back to the same level again, albeit after witnessing a roller-coaster ride in the past three years.

The mood is not euphoric as it was in 2006. Quite understandable, given that the index is still 42% away from its record high seen at the start of 2008.

Yet, the pace and timing of the recent rally have taken everybody by surprise. On Monday, the Sensex climbed 732 points, or 6.4%, to close at 12,135, recording a 1,133-point jump in just two sessions. The rally was much sharper than in 2006 when it took 16 trading sessions for the index to move from 11K to 12K.

Three years ago, the move to 12,000 was fuelled by the announcement of strong quarterly numbers by corporates. This time around, corporate numbers have been disappointing, but strong liquidity flows have more than compensated for it. According to BSE’s provisional data, FIIs were net-buyers for Rs 1,417 crore on Monday. Since mid-March, these players have net-bought shares worth $2 billion.

“It’s a liquidity-driven rally. We have already seen most of the worst and we hope there will be a gradual improvement in fundamentals from hereon. There had been huge withdrawals of foreign money, but that seems to have stopped now,” said Centrum Broking MD Devesh Kumar. He, however, cautions investors that there will be a major correction before a new government is formed.

The next keenly-awaited event is the outcome of the general elections. While it is widely felt that either the UPA or the NDA would form the government with the help of their respective allies, brokers feel any possibility outside of this would not augur well for the market.
MUMBAI: It was around the same time in 2006 when the Sensex had touched the 12,000-mark for the first time in its history. And now, it’s back to the same level again, albeit after witnessing a roller-coaster ride in the past three years. The mood is not euphoric as it was in 2006. Quite understandable, given that the index is still 42% away from its record high seen at the start of 2008.

Yet, the pace and timing of the recent rally have taken everybody by surprise. On Monday, the Sensex climbed 732 points, or 6.4%, to close at 12,135, recording a 1,133-point jump in just two sessions. The rally was much sharper than in 2006 when it took 16 trading sessions for the index to move from 11K to 12K.

Three years ago, the move to 12,000 was fuelled by the announcement of strong quarterly numbers by corporates. This time around, corporate numbers have been disappointing, but strong liquidity flows have more than compensated for it. According to BSE’s provisional data, FIIs were net-buyers for Rs 1,417 crore on Monday. Since mid-March, these players have net-bought shares worth $2 billion.

“It’s a liquidity-driven rally. We have already seen most of the worst and we hope there will be a gradual improvement in fundamentals from hereon. There had been huge withdrawals of foreign money, but that seems to have stopped now,” said Centrum Broking MD Devesh Kumar. He, however, cautions investors that there will be a major correction before a new government is formed.

The next keenly-awaited event is the outcome of the general elections. While it is widely felt that either the UPA or the NDA would form the government with the help of their respective allies, brokers feel any possibility outside of this would not augur well for the market.

source: Economictimes

Tags: BSE Stocks, Liquidity, nse, nse technical calls, stock market

Similar Posts:

• Bear market rally seems like a set up for a crash
• Sensex touches all-time high of 21,230
• Current market rally raises optimism
• Bull vs. Bear: Will this market rally end or continue further?
• Mkt unlikely to sustain gains after gap up opening: Bhamre