The Hindu Business Line : Tech stocks drive Sensex past 8,800

TECHNOLOGY majors such as Wipro, Infosys and Satyam Computers led the rally in stock prices on Tuesday as the rupee touched a nine-month low against the US dollar, raising expectations of higher earnings for IT companies.

The better results expected by most IT companies in September quarter also led to buying interest in tech stocks. Analysts said the depreciation of the rupee against US dollar is seen positive for IT stocks as US accounts for 80 per cent of Indian software exports. BSE IT Index rose 2.52 per cent and NSE's CNX IT index rose 2.41 per cent.

In the local forex market, rupee slid to a nine-month low against the dollar — 44.2150/2250, down from Monday's closing at 44.13/14 — on the back of heavy import-related demand for the greenback. Currency traders said that the fall in the local currency was in tandem with a global fall of major currencies like the euro and the yen against the dollar.

The active buying in index heavyweight technology stocks and auto stocks pushed Sensex to cross another new high of 8,800 level in today's trading. At close, the 30-stock benchmark BSE index ended the day at 8799.66, a rise of 102.31 points (1.18 per cent). On NSE, S&P CNX Nifty closed at 2663.35, a gain of 33.3 points (1.27 per cent), a new high for the index.

But the rise in indices in the recent past is primarily due to the buying by mutual funds and not FIIs who have been net sellers in the last two trading sessions. On Monday, FIIs were net sellers to the tune of Rs 118.4 crore and mutual funds were net buyers of Rs 156 crore.

Even at these levels most of the brokers are upbeat and expect the Sensex to rise further.

"We remain positive on the prospects of the Indian stocks. Liquidity is expected to remain sufficient. We further believe that the opportunity, which Indian stock market provides, is still high and scores well compared to most of the emerging markets," said a note by Kotak Securities released on Tuesday. Today's rally was more broad-based compared to Monday. There were more shares that advanced compared to declines.

Foreign broking firm JM Morgan Stanley said, "There are still no signs of topping out, and, hence, the bulls can comfortably hold on to long positions. The fact that the indices have yet again corrected and moved up is a very healthy sign for the uptrend as the weak hands keep moving out while strong hands further strengthen their position."

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