Spurred by Reliance, Sensex hits 7000

MUMBAI: The 130-year-old Bombay Stock Exchange created history on Monday. As the much-awaited monsoon broke over Mumbai, the benchmark Sensex hit the magical 7,000 level for the first time in intra-day trading as bulls scrambled to buy Reliance stocks after Saturday's announcement of settlement in the Rs 100,000-crore Ambani empire.



The Sensex was not able to sustain at that level for a long time. It closed at a new all-time high of 6984.55, gaining 78.03 points from its previous close. But not before the Sensex hit a new all-time high of 7001.55 in intra-day trades.



The markets, which were lacking direction in the last couple of days, received a major trigger after the settlement in the Reliance group and good monsoon showers in Maharashtra. Major Reliance group companies like Reliance Industries, Energy and Capital hit their new peaks in euphoric buying.



Said leading stock broker Rakesh Jhunjhunwala, “I am happy and my outlook for the markets is positive. The markets are moving in an upward direction. The surge in Reliance stocks has been supporting the index since the 6,700 levels and it played a major role on Monday too. Factors like hike in crude prices also played an important role.”



Anil Ambani group stocks outpaced his elder brother's companies in gains on the exchanges. REL was biggest gainer on the Sensex, up 11.33 percent to close the day at Rs 658.25.



The RIL stock closed at its all-time high of Rs 630.40, gaining 4.92 percent over its previous close. RCL surged 24.79 percent to Rs 294.20 and IPCL rose 3.94 percent to Rs 167.60.



“Reliance was the main trigger for the market that touched the 7,000 mark today (on Monday). They will continue to be that (way),” JM Morgan Stanley chairman Nimesh Kampani said.



On a day of high drama in the street, the trading volume in Reliance stocks went through the roof. The volume in four Reliance stocks on the BSE and the NSE touched a whopping Rs 4,987 crore (out of the total turnover of Rs 9,933 crore on both the exchanges).



RIL accounted for a turnover of Rs 1,523 crore on the NSE and Rs 620 crore on the BSE. Significantly, RCL notched up a turnover of Rs 1,480 crore on both the bourses.



Investor wealth in Reliance stocks also jumped on Monday. The four Reliance companies added over Rs 6,000 crore to investor wealth. RIL contributed maximum with Rs 4,100 crore jump in market cap.



Mihir Vora, vice president-head of equity, ABN Amro AMC, said: “The Reliance pack was mainly responsible for the rise in Sensex. Going ahead the market still looks positive on back of fund inflows into Indian equities following strong fundamentals and Indian economy. Sectors contributing to infrastructure and consumption led demand will remain in limelight.”



While infotech and Reliance stocks remained bullish, several mid-cap and low-cap stocks fell for the third successive day. There is a school of thought that the market is in an over-bought position.



Though the Sensex hit the all-time high, the broader 50-share S&P CNX Nifty is yet to reach its peak. After touching a high of 2150.25, the Nifty eventually ended at 2144.35 on Monday, up 20.95 points or 1 percent from its previous close. Despite the Nifty closing in black, it has still not touched its intra-day all-time high of 2183.45 on March 9, 2005.



Now the big question is: Will the Sensex remain above the 7000 level? “Even if there is a correction in the markets, it may not happen immediately. A correction can be expected only after the first quarter results of FY06 are declared. If the results are disappointing, then the markets may fall to 6700 levels in the worst case scenario,” said Vasudeo Joshi, investment consultant. “Encouraging results may see the index stabilising at 6750-6800 levels.”