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Sensex 5,700!

The festive season continues for the Indian equity market with the Sensex gaining 2.85 per cent over the week to close just below the 5,700-point mark. The new decision on disinvestment and strong FII inflows were the key triggers.

Indian stock markets seem to be on a big bull run. Continuing its fourth week of a rising trend, the BSE Sensex gained another 2.85 per cent this week to close just below the 5,700-point mark. In fact, in the intra-day trade, the Sensex briefly crossed past the 5,700 points but was unable to hold on to that level and ended at 5,699.24 points. The S&P CNX Nifty, on the other hand, touched an all-time high of 1,840.35 points on Friday, before closing at 1,837.05 points -- a gain of 3.3 per cent over the week. The Nifty's previous all-time high was 1,818.15 points, which it had touched on February 23, 2000.

The Sensex has gained 17.78 per cent in five straight weeks. And with just three trading sessions left for 2003, the Sensex has already gained 68.75 per cent – the highest calendar year gain in the past 12 years. A robust FII inflow has been the key to this phenomenal rise in the Indian stock markets. This week, FIIs bought equities worth Rs 1,200 crore – the highest in the last three weeks. In 2003 so far, FIIs have pumped in nearly Rs 30,000 crore as against Rs 3,645 crore in 2002 and Rs 13,387 crore in 2001.

The market breadth remained positive throughout the week, with the broader S&P CNX 500 Index gaining 3.2 per cent. And once again, the week belonged to the mid-caps. The S&P CNX Mid-cap 200 Index gained 3.63 per cent – higher than the large-cap indices.

Except for a minor blip on Wednesday, the Sensex gained on each trading session. The market gained the most on Thursday (78 points) after the Cabinet Committee on Disinvestment (CCD) announced its decision to sell the government's 10 per cent equity holdings each in ONGC and GAIL. With this sell-off, the government is likely to get Rs 12,443 crore and will help the government in achieving its disinvestment target of Rs 13,200 crore. The government has so far achieved just 10 per cent of this target. Thus, for the obvious reasons, the BSE PSU Index gained 3.7 per cent over the week.

The BSE Bankex Index was the biggest gainer of the week – up 5.11 per cent. Banks are bullish on the corporate sectors' performance due to the expanding economy, which may trigger credit offtake from the banks. Technology shares too continued to gain ahead of the earnings season, which will start flowing in early January. After gaining 4.36 per cent in the previous week, the BSE IT Index gained 1.8 per cent this week.

The renewed buying interest in FMCG stocks continued this week too, with the BSE FMCG Index gaining 1.22 per cent. The BSE Healthcare Index, however, ended the week flat. The major reason for it was Ranbaxy CEO D. S.Brar's decision of not renewing his contract for the company in 2004.

Interestingly, the Indraprastha Gas Limited IPO which closed on December 5, got listed at Rs 110 on debut as against the offer price of Rs 48 per share. It even touched a high of Rs 199 in the intra-day trade (on NSE) but finally closed at Rs 119.20 -- up 148 per cent from its offer price.

The market is on a blast and more fireworks can be expected in the New Year due to good FII inflows. However, minor corrections cannot be ruled out in the coming week.