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Sensex zooms past 6300 mark

By Our Special Correspondent

MUMBAI, DEC. 2. The Sensex (the benchmark sensitive index of the Bombay Stock Exchange) closed today at a record high of 6328.43 up 100.60 points, or 1.62 per cent over its previous close — after touching an all time high in the intra-day at 6335.14 on sustained buying in pivotals, following strong inflow of funds from foreign institutional investors (FIIs) and a sharp fall in global crude oil prices.

Bank, automobile, oil and cement stocks rallied, while technology stocks declined on the strengthening of rupee against the dollar. The mood in the market appeared extremely bullish on strong foreign fund flows, which crossed the $7 billion-mark so far in the current year. In November the FII inflows have touched Rs. 6,740.80 crores, much higher than the October figure of Rs. 3,263.30 crores. The cumulative FII investment for the calendar year 2004 has reached Rs. 33,158.30 crores. In 2003, FIIs had brought in Rs 30,458.70 crores.

"The FII inflows continue to remain strong and the fundamentals of the economy is looking good. I think the current rally in the market reflects the strong corporate performance," according to Sashi Krishnan, Chief Executive of Cholamandalam Asset Management Company. In terms of valuation the market is still not very expensive and on a stock specific basis there are still good value buys in the market, Mr. Krishnan said.

The Sensex opened on a firm note at 6275.41 compared to its previous close of 6227.83. Throughout the trading session the Sensex remained in the positive zone. The NSE Nifty gained 36.95 points to end at 1,999 as compared to its previous close of 1962.05. The volumes on the bourses were high, with shares worth Rs. 2,692.94 crores being traded on the BSE compared to Rs. 2,304.80 crores yesterday.

"It is like the boom we witnessed in 2000. But with a difference. Global economic dynamics has changed. Indian economy is much stronger and better placed than it was then," said Alok Agarwal, Senior analyst, Motilal Oswal Securities. "Participation in this boom is across much larger number of sectors unlike the 2000 boom of TMT sectors.

However markets are not expensive as the forward P/E (price-earning) is about 14, as compared to 32 then", Mr. Agarwal said.

Fall in crude prices

Indian Oil, Bharat Petroleum and Hindustan Petroleum surged following a sharp fall in international oil prices. On Wednesday, the crude futures declined by $ 3.64 to $ 45.49 a barrel on the New York Mercantile Exchange. Share prices of GAIL also moved up on news that the company was in talks with China Gas Holdings to buy its stake.

There are hopes that a fall in international crude oil prices would bring down transportation and energy costs for the cement companies. State Bank of India, Corporation Bank, Union Bank of India and Allahabad Bank ended higher on sustained buying interest. Reliance Industries, ONGC, ICICI Bank and Hindustan Lever also contributed to the gains.

Rupee at 7-month closing high

The sustained FII inflow resulted in the Indian currency hitting over 7-month closing high of 44.10/12 a dollar, up by 35 paise compared to the previous day closing. The U.S. currency tumbled against other global currencies too, on the back of declining world oil prices. The rupee gained 96 paise against the dollar since last Friday.

Even the dollar buying intervention conducted by the central bank through the state-owned banks could not stem the rise of rupee against the dollar, dealers said. Crude oil prices tumbled to $ 45.47 a barrel on Thursday in Asian trade. The U.S. currency plunged to record lows against the Euro and British Sterling.

After opening the rupee hit the peak of Rs. 44.05/07 per dollar. On intervention by the central bank it touched a low of 44.30/32 at one stage. The Reserve Bank of India fixed the reference rate for the U.S. currency at Rs. 44.22 a dollar.

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