The Hindu Business Line : Sensex zooms past 7,500 on foreign fund inflows; bank stocks shine

Bank stocks, including SBI and ICICI Bank, lead the pack as FIIs continued to buy shares ahead of the quarterly review of the monetary policy on Tuesday.

However, some weakness persisted in mid-cap and small-cap stocks as retail and non-institutional investors stayed away from the market due to over-stretched valuations in this segment.

Buying support sustained throughout Monday's session as the BSE Sensex and S&P CNX Nifty ended at levels close to the day's high. The BSE Sensex closed at 7,505.60, up 82.35 points (1.11 per cent). On the NSE, the S&P CNX Nifty rose 26.15 points (1.15 per cent) to finish at 2,291.75.

The BSE Bankex Index moved up by more than 4 per cent, the highest among all the sectoral indices of the exchange.

"Earlier there were expectation of hike in interest rate, but after the revaluation of yuan by China this may not happen. This led to rise in banks stocks," said a dealer with a domestic broking firm.

But across-the-board firmness in stock prices, as seen last week, was not seen today.

On the BSE, for every one stock that rose, there was another stock that fell.

While on the NSE, the advance decline ratio was negative.

Brokers said this was due to investors turning cautious after the sharp run-up in the mid-cap and small-cap stocks. "Small investors are not participating in the current rally," said Mr V.K. Sharma, Head of Research, Anagram Stock Broking.

He said the money is flowing into frontline stocks and this money is coming mainly from new FIIs.

FIIs continued to show their faith on the Indian equity market with net investment of Rs 1,040.60 crore on Friday.

At close, traders advised caution and asked investors to focus on specific stocks and not buy anything that comes their way.

"When stock prices are in a new territory, it is better to wait and watch than buy at any rate," said a dealer with a domestic broking firm.

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