Wowed by Dow, bulls brace for the 14K jump

MUMBAI: The bull-ring is throbbing with action once more. The red-eyed beast tossed the Bombay Stock Exchange Sensex up close 14,000 on Friday, and word from the arena is that the mark is just a snorting distance away.

“Sensex 14,000 is on the cards on Monday provided global cues are on our side,” said Pritesh Mehta, market analyst at India Infoline.

That seems to be happening. The global markets are looking good, what with the US stock market benchmark, the Dow Jones, making an all-time intra-day high on Friday, and the tech-heavy Nasdaq, hitting a six-year high in early trades.

The Reserve Bank of India (RBI) could, of course, pour cold water on market momentum next week by raising interest rates, but a section of the market feels that this hike has already been factored in.

“Corporate earnings have been fairly stable, and as long as global liquidity flows and cues from world markets are positive, the RBI raising rates will not impact momentum,” said Dhiraj Sachdev, vice-president and fund manager, portfolio management services, at HSBC.

The inflation numbers released on Friday weren’t too good. The wholesale prices index accelerated for the week ended April 7, 2007, to 6.09%, from 5.74% in the previous week, but the finance minister was quick to discount the spike. He said the next week’s numbers should be below 6%.

Deepak Mohoni, managing director of trendwatchindia.com, feels that we’re driven far more by international markets than local developments.

“With global markets rallying nicely, the only threat right now is whether the Asian markets will continue rising - as they did on Friday after the previous day’s crash,” said Mohoni.

“As long as the Asian markets hold up, there is no reason why we cannot continue climbing for now. Global, rather than local factors, count, as is evident in the strong rally in banking stocks despite the cash reserve ratio (CRR) hike, and the undistinguished show from technology stocks despite stunning results,” he said.

The view from technical analysts is one of extreme optimism. “I’m in a bullish mode, and see the Sensex making a new high in a month or so,” said Upendra Doshi, technical analyst at Doshi Securities. The Sensex’s all-time high was recorded on February 8, 2007, when it closed at 14,652.09. It closed Friday at 13,897.41, a gain of 277.71 points (2.04%) from its previous close.

“The candle shows a shaven head (meaning the Sensex made its all-time closing high this month on Friday), and I see the index making new highs,” said Prem Daga, a technical analyst.