Sensex closes above 15000 mark after nine months

Sensex is fifteen, again. After nine months, the BSE benchmark topped the 15000-mark on a closing basis on Thursday.

Though the index began the day in the red and dipped further to the day’s low of 14599 in early trade, bulls came to work after the President’s address to the new-look Parliament. Stocks were in demand after the speech promised to deliver on market’s pet themes of infrastructure spending and PSU divestments. The index never looked back, gaining 409 points from the day’s low to end at 15008. It gained 137 points or 1% over its previous close.

The last time the index touched this mark was back in September 2, 2008.

With this gain, the Sensex is just 500 points away from erasing all its losses on a one-year basis. Exactly one year ago, on June 4, 2008, the index was at 15514.

For the first time since the crash in January 2008, Indian markets are on the verge of posting positive returns on a trailing 12 months basis.

Experts say higher lows and higher highs are one of the signs to look for in a bull market. Though there are no conclusions yet, there is a lot of activity in the institutional space with two leading FIIs conducting widely attended investor meets this week.
Riddham Desai, managing director, Morgan Stanley Equity research, which hosted one of these meets said many global investors are sceptical in terms of valuation. “Global investors are sceptical on two counts. One is, valuation is too rich. India trades at 17 times trailing earnings. This is about 50% premium to emerging-market multiples. Also, they are not sure what the government will do. So, though there is a lot of interest in India, investors are not jumping to buy.”

However, the Union budget, due on July 3, could take away lot of this scepticism. And unless a major risk event occurs globally, flows into Indian markets will continue, he said.

FII inflows have already crossed Rs 20,000 crore for the year.

Sai Krishna Tampi, head - portfolio management, India, Credit Suisse securities, says, “On a longer term basis, we are optimistic on Indian equities even from these levels. We are still around fair value in terms of valuation. Also, from a fund flows perspective, we have momentum in our favour. Global investor risk appetite has moved from panic to close to euphoric levels.”

Tampi warns that in the short term there could be some correction. “In the short term, however, we are not ruling out a correction from these levels since we have run up quite significantly.”