Financial Daily from THE HINDU group of publications
Tuesday, Feb 15, 2005
Markets - Stock Markets
Sensex tops 6,700 intra-day; markets overheated, feel FIIs
Mumbai , Feb. 14
MARKET participants gave themselves a Valentine's Day bouquet, though the flowers started wilting by the end of the session. Stock markets opened strong and registered quick gains in the morning with the indices breaching all time high levels.
The Sensex crossed the 6700-level mark and touched an intra-day high of 6719.20. Though the 30-stock index fell subsequently, it closed at its all time high of 6679.33, up marginally from its earlier highest of 6679.20 on January 3, 2005.
The Nifty also traced a similar pattern though it did not breach any previous highs. The index touched an intra-day high of 2110.15, later it slipped below the 2100-level and closed at 2098.25.
Both the indices were dragged down in the last hour of trading as market participants started booking profits across the board.
Brokers say that there is a lot of uncertainty ranging from election results to announcements of the Railways and Union Budgets, as well as the Economic Survey. Markets are likely to be volatile with sharp surges, upwards or downwards, they say.
Several institutional brokers and foreign institutional investors (FIIs) are taking the view that the markets are getting overheated. Several brokerages are considering short-term `sell' advice to their clients at 6700 levels. JP Morgan, DSP Merrill Lynch and several other FIIs have fixed a target of 7000 on the Sensex for this year. With the indices pushing this level aggressively in six weeks of trading this calendar year, concerns about overheating are becoming increasingly palpable.
Foreign institutional investors have pumped in Rs 4,708.5 crore in the first fortnight of February.
BHEL, Infosys and Bharti Tele were the big gainers on the Sensex despite losing steam in the last hour of trade. BHEL gained 5.11 per cent to close at Rs 860.30. Infosys netted gains of Rs 65.55, and appreciated by 3.12 per cent to close at Rs 2,168.85. FII favourite Bharti Tele appreciated by 2.95 per cent and closed at Rs 214.80.
Technology stocks had a good day the bourses. BSE's technology index, BSETECk, was the biggest gainer among the indices, rising by 2.46 per cent. Mphasis BFL, which announced acquisition of the UK-based Princeton consulting in an all-cash deal for £7.73 million, gained by over five per cent on BSE. The scrip closed at Rs 257.55, up by Rs 12.75 from Friday's close. Scrips of VSNL also posted a smart rally with the scrip ending up by Rs 10.05 at Rs 229.40.
Brokers are advising caution at these levels; volatility mixed with any "perceived bad news" could lead to a downslide. This is not a market for the weak hearted now, said a BSE broker.
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