Mumbai, September 30
Reports of higher advance tax paid by companies ahead of second quarter results and rising global liquidity pushed the Sensex above 17,000 levels for the first time since May 21, 2008. The benchmark index closed 273 points higher at 17,126. In the broader markets, the Nifty closed 77 points higher at 5,083.
Rising levels of optimism were also boosted by the strong listing of Oil India Ltd. The IPO that was priced at Rs 1,050 gained 8.6 per cent to close at Rs 1,140. Merchant bankers and brokerages expect forthcoming IPOs by private and public companies to receive an encouraging response.
Of the Sensex scrips SBI and ICICI Bank were the major gainers closing higher by 5 per cent and 4.6 per cent, respectively. Auto stocks were the other big gainers with M&M and Maruti closing more than 3 per cent each. Losers included ITC and ONGC, which were down more than one per cent, while Bharti was almost unchanged at Rs 418.
Among the sectoral indices the BSE Bankex was the biggest gainer closing 3.69 per cent or 350 points at higher at Rs 9,855. Of the IT stocks Financial Tech, Wipro, Patni Computer, TCS and Oracle Finance closed upto 5 per cent higher. Of the power stocks Torrent Power, BHEL, Neyveli Lignite, ABB and Tata Power were the major gainers.
Q&A
with Basant Maheshwari, who runs The Equity Desk - a forum where investors meet and share information on various companies and discuss investment strategies.
Q Has the market become too expensive?
A Yes, but the valuation is defined by the collective wisdom of the market that appears cheap or expensive only in hindsight. The biggest problem that investors face is to cut off the time charts according to their convenience. So if we see from March 2009, the Sensex has gone up 115 per cent but from September 2008 it is up only about 20 per cent. Hence you can define the returns according to what you want to project and influence the investors into believing.
Q Gold, commodities and stocks are up. Is rising tide lifting all boats?
A The US printing press is lifting all boats. More then $1 trillion has been printed and pumped and the money is chasing anything that is a hedge against the developed economies.
Q How should the retail investor play now? There is a lot of retail interest coming in as the market is going higher?
A This is tricky, but if the retail investor has a long term (3-5 year) view in true sense, then there are several companies available at 3-7 per cent dividend yields growing at 20 per cent and above and trading at less then 10-12 times PE multiples on FY11 basis. The biggest enemy of the retail investor is the experts who have no accountability and have got it wrong.
