The Hindu Business Line : Sensex drives past 12,700

The BSE Sensex revved past the 12,700 mark for the first time on Friday, on the back of good corporate earnings, decline in crude oil prices and strong growth in the manufacturing sector.

Sensex touched an intra-day high of 12,756.23 points before settling down at 12,736.42, up 198.44 points or 1.58 per cent. The previous high was 12,612.38 points on May 10 this year.

In tandem, the rupee firmed up against the greenback on dollar inflows into the forex market.

The domestic currency opened at 45.46/47 and ended at 45.44, a jump of around 20 paise from Thursday's close at 45.63. The upward momentum in markets for the second consecutive day was largely supported by IT, cement, retail and real estate stocks.

The BSE IT index was the biggest gainer, up 2.30 per cent at 4,797.04 points.

Following Infosys, dealers expect most companies to declare excellent second quarter results.

The NSE S&P CNX Nifty index gained 1.52 per cent to close at 3,676.05.

Stable interest rates and slipping crude oil prices have been the immediate triggers for the rising markets, said dealers.

"The markets will continue to remain bullish as the Indian economy is doing well. Also, participation has come from all sectors, domestic and foreign. However, retail investors are still staying away," said Mr K.D. Mehru, Vice-President (Equity Research), Khandwala Securities.

Others also said that retail investors are rather inactive; institutions and FIIs are dominating the show.

FIIs were net buyers of Rs 995.01 crore on Friday, going by provisional figures on the NSE. High institutional interest was witnessed. Mutual funds, however, have been net sellers in October at Rs 34.11 crore.

Going forward towards Diwali, market sources expect the Sensex to rise and at least sustain the current levels. Short covering was seen on Nifty. "Levels of 13,000 for Sensex and 3,750 for Nifty can be seen in the next few days," said Mr Ravindra Kasliwala, Head (Equity), Inventure Growth and Securities Ltd.

"The momentum should continue till the end of the result season," said Mr Kunj Bansal, Chief Investment Officer of Religare Securities.

Volumes were strong on the BSE - turnover stood at Rs 4,100.66 crore on Friday.

The rally was led mostly by frontline stocks. Mid-cap and small cap stocks also ended higher, although marginally. Yet, the overall market breadth was negative. Stocks of 1,444 companies declined while only 1,083 stocks gained on the BSE.

Reliance Communications was the biggest gainer, up 6.32 per cent at Rs 367.80, while Infosys rose 3.34 per cent to Rs 2,088.65 and HDFC Bank was up 3.11 per cent at Rs 988.70.

"In terms of valuations, the stocks look good and there is buying interest in India. However, this rally has been without much correction and therefore, we cannot be aggressively bullish,," said Mr Jayant Pai, Vice-President, Parag Parikh Financial Advisory Services Ltd.