BSE Sensex hits life high of 21,294; caution prevails

MUMBAI Fri Nov 1, 2013 4:40pm IST

A road sign stands next to the Bombay Stock Exchange building (R), August 3, 2005. REUTERS/Arko Datta/Files

A road sign stands next to the Bombay Stock Exchange building (R), August 3, 2005.

Credit: Reuters/Arko Datta/Files

Related Topics

Stocks

   
Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

MUMBAI (Reuters) - The Sensex surged to a record on Friday as blue chips rallied on the back of strong foreign buying, in a remarkable turnaround from two months earlier, when the rupee hit record lows and threatened a crisis of confidence.

The Sensex has been propelled by foreign inflows of around $3.5 billion since the Federal Reserve unexpectedly delayed tapering of its monetary stimulus.

The foreign buying comes despite mixed signals in an economy growing at its slowest in a decade, with analysts seeing new challenges ahead as the central bank raises interest rates to curb stubbornly high inflation.

That has made some investors cautious about whether a rally that has sent the index up 21.5 percent since a yearly low on August 28. can be sustained.

"I am not too pleased with the way fundamentals are shaping up. This new high is driven by only a handful of stocks which are hopelessly expensive, despite fundamentals," said fund manager Phani Sekhar at Angel Broking.

"The liquidity rush is making people accumulate stocks. If fundamentals don't improve or liquidity tapers, then this rally won't have many legs."

The Sensex rose as high as 21,293.88 points, a gain of 0.6 percent for the day, surpassing the previous record of 21,206.77 points on January 10, 2008. It ended Friday up 0.2 percent.

Despite the record high, the Sensex remains Asia's fourth-worst performer this year in dollar terms among the exchanges tracked by Thomson Reuters, with a fall of 2.6 percent.

The returns have been hurt by a weak rupee, which hit a record low of 68.85 in late August, that had sparked concerns about a currency crisis in the country.

Those concerns have subsided, thanks to the delay in the Fed tapering and steps to steady the rupee taken by India's new central bank governor Raghuram Rajan.

Still, challenges to the broader economy remain. Manufacturing activity contracted for a third straight month in October, data on Friday showed, for example.

Signs of weakness are keeping the economic outlook uncertain even as other data show signs of improvement, including a report showing India's infrastructure sector output rising at its fastest in a year.

The World Bank last month slashed its growth forecast for Asia's third-largest economy to 4.7 percent in the year ending March, below the decade low of 5 percent in the previous fiscal.

The Reserve Bank of India also raised interest rates by a quarter percentage point for a second consecutive month in October, to fight accelerating inflation.

Indian shares are expensive compared to regional peers, trading at about 14.4 times trailing 12-month earnings compared to 10.6 times for Asian emerging markets, Credit Suisse said.

Yet blue chips have been gaining. The Nifty rose 0.1 percent, also within sight of a record high set on January 8, 2008.

State-owned banks gained for a second consecutive session on Friday on hopes of stabilising asset quality, sending State Bank of India Ltd (SBI.NS) up 5 percent.

Among other lenders, Bank of India (BOI.NS) rose 5.5 percent, while Bank of Baroda (BOB.NS) surged 4.5 percent.

Infrastructure Development Finance Co Ltd (IDFC.NS) shares jumped 6.8 percent after its September-quarter consolidated net profit beat some analyst expectations.

Hero MotoCorp Ltd (HROM.NS) gained 1.1 percent after the company said October sales rose 18.2 percent.

Dr.Reddy's Laboratories Ltd (REDY.NS) gained 0.6 percent after its September-quarter consolidated net rose 69 percent to 6.90 billion rupees.

Shares of Titan Co Ltd (TITN.NS) fell 2.1 percent after its September-quarter net profit missed some analyst estimates.

(Editing by Clarence Fernandez)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

EARNINGS

Reuters Showcase

Vodafone Ruling

Vodafone Ruling

Government will not appeal Vodafone tax ruling   Full Article 

Indian Railways

Indian Railways

Private refiners compete with state firm to sell diesel to railways   Full Article 

Ranbaxy Results

Ranbaxy Results

Dec-quarter net loss widens on forex loss  Full Article 

Market Eye

Market Eye

Sensex, Nifty retreat from record highs on profit-taking.  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage