Source :MUMBAI:14 SEP, 2010, 03.11PM IST,PTI, & ET
With the BSE benchmark Sensex breaching the 19,000-level and still going strong, analysts believe that Indian markets have entered a bull phase and persistent FII inflows may push the index past the 20,000-mark in the coming days.
"Investors are sitting on huge cash piles and as the market is rising, they cannot sit sideways for long. A large chunk of cash is coming in the market and in such a scenario, hitting the 20,000-mark seems easy," CNI Research CMD Kishore Ostwal said.
"By October the Sensex is likely to cross the 20,000-mark and by November, I see it at the 21,000-level," Ostwal added.
The Sensex had touched an all-time high level of 21,206 in January, 2008, a year that saw the benchmark index of the Bombay Stock Exchange record an over 80 per cent jump.
Echoing a similar opinion, Network Stock Brokings Head of Institutional Sales & Strategy Prakash Diwan said hitting the 20,000-level would not be a big deal in the coming days.
"The market is driven by strong liquidity and FII inflows are expected to continue in the local stock market. Hitting the 20,000-level by Sensex would not be a big deal. Soon the Sensex will be able to reach that level," he said.
Yesterday, the Sensex zoomed by more than 408 points to cross the 19,000-level for the first time in 32 months.
"Investors have faith in the India growth story and in the coming days, the Sensex will touch new highs," Diwan added.
The index has risen 122.3 per cent so far this year, from a low of 8,701.07 in October, 2008, on account of the global economic crisis.
"I do not see any reason why markets should not move up. It is a liquidity-supported rally and unabated FII inflows would further push local markets," SMC Global Securities Equity Head Jagannadham Thunuguntla said.
"India is one of the hot spots for overseas investors and those fund houses, which were still watching the situation, now are interested to pick up local stocks as global equities are rebounding," Thunuguntla added.
The Sensex took just five days to reach the 19,000-level from the 18,221.43 mark. On September 3, the index had settled at 18,221.43.
Three banking stocks -- SBI, ICICI Bank and HDFC -- accounted for about 70 per cent of the Sensex's rise from 18,000 to 19,000.
"Banks are on a rising streak on optimism that lending will pick up in a fast-growing Indian economy and that they are well capitalised," IIFL Vice-President (Research) Amar Ambani said.
"Banking stocks jumped as regulators gave firms more time than expected to meet capital requirements (the Basel norms)," another analyst added.
However, equity analysts did not rule out a correction in the markets, as they felt stocks are overvalued.
"Investors should take cautious approach about the market this time. A fall from this high cannot be ruled out," Unicon Financial CEO Gajendra Nagpal said.
The BSE benchmark Sensex was up by 153.39 points at 19,361.72 today, with just an hour left before the close of trade.
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