Sensex shrugs off shakedown, sniffs 18k

Turnover blasts past records as money rushes in n DLF surge takes doyen K P Singh past Anil Ambani in wealth

MUMBAI: A rampaging ride, a violent shakedown and an amphetamine rebound.

That’s the story of Sensex on Wednesday, which saw both bulls and bears being hung to dry — together — in a matter of 15 minutes.

After playing catch-up in the morning - on Tuesday Asia had a ball while India was paying obeisance to the Mahatma — the index continued to defy gravity and flirted with 18,000 by noon.

Then the Hang Seng went crazy as profit-booking ended a four-day tear.

The Hong Kong shove prised out bricks on Dalal St, and in a matter of minutes, the Sensex, which had racked up gains of 600 points, plunged 665 to an intra-day low of 17,288.

Market players attribute this to a combination of profit-booking as it approached the 18000-mark and the 1700-point vertical intra-day drop in the Hang Seng.

This, says the Street, may be a sign of volatility to come.

Amitabh Chakraborty, president-equities, Religare Securities, said rumours of fund-selling by the likes of Goldman Sachs were doing the rounds in the mid-session when the Sensex lost more than 600 points from the top.

“That’s when fears of the much-awaited correction resurfaced. But the correction was extremely short-lived,” he said.
The Sensex ended more than 500 points higher at 17847, buoyed by aggressive buying in Reliance Industries, Reliance Energy, NTPC, Infosys and Reliance Communications, Chakraborty said.

Total turnover blasted past previous records to around Rs 1.36 lakh crore, about Rs 10,000 crore more than what Hong Kong clocked.

Also, in the see-saw, Kushal Pal Singh, the DLF patriarch, went one up on the younger Ambani yet again.

The combined might of Reliance Natural, Reliance Energy, Reliance Communication and Reliance Capital could not thwart Singh’s ascension to the No. 2 spot among wealthiest Indians after Mukesh Ambani.

The DLF share’s 16% rise added Rs 20,782 crore to its market capitalisation, catapulting Singh’s net worth to Rs 1.34 lakh crore now compared with Anil Ambani’s Rs 1.3 lakh crore.

Sensex shrugs off shakeoff, eyes 18k

What’s the road ahead for the broader market?

While the Sensex can kiss the 18k mark sooner than later, a correction appears inevitable, said players.
Amar Ambani, vice-president, research, India Infoline, said valuations have surely spiked.

“But even keeping them aside, it would be healthy for the market to have a correction after such a rally. But liquidity remains high as people are taking money out of dollar assets and investing in non-dollar assets. Also, the advance tax numbers have been good and the festival season will kick off demand in sectors like auto, which augur well,” he said.

The Sensex has hit a new high in each of the last 10 trading sessions — from September 19 2007, to October 3, 2007.
Heavy FII buying and hopes of a further cut interest rates by the US Federal Reserve at its next policy meeting on October 30-31 have boosted the bourses.

In 11 trading sessions since the Fed cut, FIIs have pumped in Rs 17,000 crore into India.

Pankaj Valia, independent investment advisor, feels this flow will continue with newer players wanting to be part of the India story.

“Nobody wants to be left out. More funds are waiting to get in and they are ready to pay a higher premium though they do not expect any upward revision in earnings. That’s why we see a re-rating happening.”

He, however, warns overconfidence seems to be the biggest threat to the market and advises investors against chasing stocks.

“You will not get any warning when it falls - just like what you saw on Wednesday afternoon.”