FIIS carry past 20k

Tuesday was a cause for celebration marking a culmination in the Sensex renaissance as the market hit 20,000 points.

Tuesday was a cause for celebration marking a culmination in the Sensex renaissance as the market hit 20,000 points on the back of a continuing surge in investments from Foreign Institutional Investors (FII). The two days which followed,however,had investors who were banking on a correction smirking until market rebounded on Friday,closing for the week at 20,045.18. The Nifty closed at 6,018.30 points.

The story has been and remains FIIs. Not only did inflows continue,but the government also raised its cap on FIIs to facilitate further investments from outside India. Over the last week,foreign investors poured $2.7 billion into the equities market. The liquidity is there and will continue to stay there for the foreseeable future, said Krishna Sanghvi,head of equities,Kotak Amc. I dont think its possible to predict,but based on this liquidity based rally,its probably time to look passed just the next week and maybe make longer calls on long-term valuations.

Whats next is indeed tough to predict,but most experts are calling for a rise in the market before it levels-off for more than a couple days or a week. With inflows continuing to make their way in,there doesnt seem to be any reason why it wont hit 21,000, Sanghvi added But again,it is very difficult to predict.

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Financial planners are encouraging investors not to be scared off by marginal corrections and that a similar correction which followed the last 20k citing – a fall of about 60 per cent – is unlikely to occur barring unforeseeable social and economic occurrences.

When asked if a worst case scenario played out during the Common Wealth Games could have a detrimental impact,Sanghvi said,I cant really see a correlation,theres really nothing to worry about with the games.

The Nifty seems to be running in a reactionary cycle between 5,900 and 6,050. Support from investors seems solid at the former,however resistance picks up around the latter,experts agreed. Targeted upside is around 6,050 – 6,130 points.

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