Sensex up 92 pc from 2009 lows

Despite doubts about the continuity of the rally,bulls stepped up purchases as firm global markets and higher US index futures...

Despite doubts about the continuity of the rally,bulls stepped up purchases as firm global markets and higher US index futures boosted the sentiment for the second straight day. The BSE Sensex rose 339.81 points,or 2.25 per cent,to 15,466.81 its highest closing since August 11,2008. The Samp;P CNX Nifty was up 104.95 points,or 2.31per cent,to 4,655.90 its highest closing since June 5,2008.

The BSE index has surged more than 60 per cent this year,after slumping by 52 per cent in 2008 when foreign funds pulled out about 13 billion. It has soared 92 per cent from 2009 lows in early March,mainly driven by foreign fund inflows of almost 7 billion. Comments by Petroleum Secretary R S Pandey that the government is committed to reforms in fuel pricing also boosted the sentiment. Realty stocks fell even as capital goods stocks rose. Banking stocks pared intra-day gains. Stocks extended their recent strong gains on a view that ample global liquidity and a return of risk appetite will help India Inc help raise funds for expansion which in turn will boost corporate profits, said an analyst. India Inc has already raised Rs 5,000 crore from qualified institutional placements QIPs so far in 2009 and announced plans to raise another Rs 24,000 crore.

Foreign funds are aggressively buying Indian stocks. FII invested another Rs 738 crore on Wednesday,taking the total investment in June to Rs 3,055 crore.

However,a section of dealers are skeptical about the rally. I am not comfortable with this rally. The index is being led up by big stocks like Reliance and Lamp;T,but even they can experience profit-booking. We will see a big correction soon, D D Sharma,vice president at Anand Rathi Securities,said.

Starved off gains last year,investors were buying whatever came their way after a stable government came to power last month in India,Bank of America Merrill Lynch equity strategist Vijay Gaba said. In the melee,valuation is probably the last thing in the minds of the insatiated investors at this point in time, Gaba wrote in a note titled Hunger Knows No Taste.

Still,there are concerns pricey shares and a raft of potential equity offering could threaten the stock surge. Net inflows into domestic equity mutual funds rose to Rs 1,930 crore in May 2009,the highest in 14 months,and more than twice the amount in the first four months of 2009,according to data from the Association of Mutual Funds in India.

Finance minister Pranab Mukherjees meeting with bank chiefs was also a positive development for the market.

With agencies