India's market index crosses 4,000-mark after 29 months

Tuesday, 19 August 2003, 07:00 Hrs
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MUMBAI: India's blue-chip share market index managed to cross the psychologically crucial barrier of 4,000-mark in early trade Tuesday on large-scale institutional buying in stocks of cement and steel companies.

At noon, the stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex was trading at 4,010.32, a level not seen since March 2001.

Analysts say the crossing of the 4,000-barrier comes as a major boost for domestic as well as foreign institutional investors after years of concern over sluggish market movement.

Indian stocks had remained dormant since the dotcom bust around three years ago. A flood of accusations of shady dealing and stock price manipulation had also kept the investors away from the market.

A slowing economic growth, gloomy industrial performance, and uncertain geopolitical situation inflicted more pains on bruised investors.

"It's a great thing to happen to the Indian stock market after a long, long time," said Neeraj Deewan, a senior analyst with New Delhi-based brokerage firm Quantum Securities.

"Not many would have expected the market index to breach the 4,000-barrier so soon after touching a six-month low nearly four months back. Buoyancy is being witnessed across all the industrial sectors," Deewan told IANS.

India's stock market barometer has gained nearly 38 percent since it touched a six-month low on April 25.

The seemingly never-ending rally on the bourses has also helped the key share market index to register a gain of 19 percent since the beginning of the current calendar year.

Analysts say the market optimism regarding sharply higher economic growth in the current fiscal year is acting as the main positive buying trigger.

A leading business chamber expects India's economic growth to take a big leap in 2003-04 to record a 6.5 percent growth as against 4.2 percent last year.

"The headline GDP numbers have been disappointing over the last year mainly due to the poor performance of the agricultural sector. The trough seems to be over," states the Confederation of Indian Industry.

Last year's agricultural performance was extremely poor due to the deficiency in monsoon rainfall over most of the important crop growing regions. This had adversely impacted India's economic growth.

This year, although the monsoon arrived a little late in most places, the all-India area weighted rainfall is so far 15 percent higher than normal.

The summer monsoon between June-September accounts for 80 percent of rainfall in the country and has a large bearing on the livelihood of around 65 percent of Indians depending on agriculture sector.

A surge in investments by foreign funds, which act as the backbone for India's liquidity starved capital market, has also helped the market rally.

Foreign institutional investors have pumped more than $2 billion into Indian stocks and bonds so far in 2003 compared to about $555 million in the whole of 2002.

In the early trade Tuesday, shares of Tata Steel, the country's largest private sector steel company, was quoting at 264.50, representing a gain of 2.3 percent over its Monday's close.

Steel shares have been in the limelight in the last few sessions on talks of a rise in the commodity price. The market mood was also boosted by a report that hot-rolled coil producers were considering a price hike of about five percent.

In the technology sector, Infosys Technologies, India's largest listed software maker, was up nearly one percent at 3,521.00 following a sharp overnight rally on the U.S. markets.

Source: IANS
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