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Sensex hits 17,000; Wipro, JP Asso, Sterlite Industries up

MUMBAI: The Bombay Stock Exchange's Sensex was firmly placed in the green as positive opening of European markets boosted sentiments. All the sectoral indices, barring the pharmaceuticals space, were in the positive terrain. 

At 02:45 pm; the Sensex was at 16948.48, up 143.15 points or 0.85 per cent. The 30-share index touched intraday low of 16781.62 and high of 17003.71. 

The National Stock Exchange's Nifty was at 5080.80, up 41.65 points or 0.83 per cent. The broader index touched a high of 5099.25 and low of 5032.25 in trade so far. 

BSE Midcap Index was up 0.44 per cent and BSE Smallcap Index gained 0.40 per cent. 

Amongst the sectoral indices, BSE IT Index moved 1.71 per cent higher, BSE FMCG Index gained 1 per cent, BSE Metal Index advanced 0.98 per cent and BSE Oil7gas Index was 0.95 per cent up. BSE Healthcare Index slipped 0.93 per cent. 

Wipro (3.40%), Jaiprakash Associates (2.68%), Sterlite Industries (2.55%) Infosys Technologies (2.29%) and Jindal Steel (2.17%) were the top Sensex gainers. 
Wipro Technologies is consolidating its quality and information systems, global delivery and business application services functions into a single business operations unit. The company is combining these functions to streamline delivery and simultaneously bring in greater automation at the backend. 

Wipro Infrastructure Engineering has signed a joint venture contract with Kawasaki Heavy Industries in India to set-up a manufacturing facility for hydraulic pumps for excavators. 
Bharti Airtel (-2.90%), Coal India (-2.38%), Sun Pharmaceuticals (-2.38%), NTPC (-2.16%) and Cipla (-1.26%) were amongst the losers. 

Market breadth was positive on the BSE with 1462 gainers against 1236 losers. 

The European markets opened higher on expectations of strong bail out plans for euro-zone. FTSE 100 was up 1.02 per cent, CAC 40 gained 1.60 per cent and DAX moved 1.48 per cent higher.

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Sensex in December 2011

Sensex may surge 16% to 18,741 by December 2012: 

The BSE Sensex index could surge by as much as 16 per cent next year, but the rise will be marked by "volatility".

"The probability-weighted outcome for the BSE Sensex is 18,741 for December, 2012, 16 per cent above the current level," Morgan Stanley said.

The BSE benchmark Sensex has lost over 19 per cent so far this year and closed at 16,542.62 points on December 1. The Sensex is down by nearly 22 per cent from an all-time high of 21,206.77 points scaled on January 10, 2008.

On the domestic front, factors like comforting inflation data and the government's recent bold policy announcements are likely to act as a boost for the market. However, economic turmoil in the developed world is likely to act as a dampener.

"Inflation data is already moderating, setting the stage for monetary easing. The bad news on policy has stopped, although the volatility emanating from a weak developed world could keep pegging back Indian equities,".

As per the latest data, food inflation stood at a four-month low of 8 per cent for the week ended November 19. Food inflation was in double digits for five consecutive weeks in October and early November.

"The positive side effect of any decline in inflation expectations will be a relative transfer of savings from gold to equities," the report said.

Given the decline in seasonally adjusted inflation, "The RBI is set to change policy direction via the liquidity injection, CRR cuts and rate cuts path over the coming months," it added.

However, excessive monetary easing in Europe or the US to address anemic growth could trigger a rise in commodity prices, resulting in inflation across India all over again.

In addition, unrest in the Middle East has the potential to create pain via higher oil prices. A substantial depreciation in the rupee value poses the same risk to inflation, Morgan Stanley said.

On the policy front, recent action on FDI in pension funds and retail and power tariff revisions suggest that the bad news has stopped. However, multiple state elections in the coming months could imply continuing policy stalemates.

India is in a difficult position with respect to its fiscal deficit and the global crisis could cause the fiscal deficit to rise further, which in turn could pose a "problem" for the market, the report said.
Moreover, India's current account deficit and the way it is funded (largely by capital market flows) exposes India to a global financial crisis. This was the very reason for which the Indian equity market significantly underperformed in 2008-09 even though Indian corporate earnings outperformed the rest of the world.

The report, however, cautioned that a "significant global stimulus or a breakdown in capital markets would hurt India a la 2008."

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