It took 12 sessions for the Sensex to rise from 16000 to 17000 after European Central Bank chief Mario Draghi opened a massive cash spigot.

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The barometer took 14 to blast past 18000, showing little fear of heights among participants.

Positive local and global cues, panic buying by those who felt left out and short-sellers scurrying for cover meant the index surged emphatically past Mount 18,000 on Wednesday, amid 10-month high cash volumes of Rs22,877 crore.

The index closed 353.84 points or 1.98% up at 18202.41, while the Nifty surged 2.1% to 5531.95, gunning past crucial technical resistance zones.

Rikesh Parikh, vice-president, Motilal Oswal Securities, said hopes of stability in Europe and recent domestic triggers contributed to the rise in the market.

“China has said that it would support the European Union and there have also been positive noises from the government, such as those related to road projects and supply of coal to power projects. There is also clarity on telecom policy of late. Technically, there has been a break-out from the key level of 5430 on the Nifty,” Parikh said.

Jitendra Panda, head of sales-broking at Future Capital Securities, said valuations don’t support the kind of rise seen, but high liquidity and short covering have changed the game.

“The markets have risen steadily which has led to a kind of left-out feeling among domestic participants, be it institutions or retail investors, so some of them are entering now. Also, there has been short covering by those who were doubtful about this rally and they are covering their shorts on every rise,” he said.

Foreign investors on Wednesday bought equities worth Rs1,839 crore (provisional data) and have already pumped in close to Rs24,000 crore in last one-and-a-half months.

This has led to Nifty gaining close to 19.63% in rupee terms and 28.67% in dollar terms so far in 2012.

“We are witnessing healthy buying across front-end stocks and even the midcaps are now seeing more action with retail participation coming in. The commitment levels seem to have gone up on the back of feel-good factor and the bad results are also getting discounted. There are expectations of a rate cut in March and inflation is also coming down. All these are driving up equities,” said Monal Desai, vice president and head - institutional derivatives at Prabhudas Lilladher.

The dogs of the past, the midcaps and small caps, have outperformed with the BSE Midcap and BSE Small Cap indices rising 26.20% and 27.28%, respectively, since December 31, 2011.

Experts said bourses have entered a different trajectory with 5400 levels getting breached - and that level may be the new support.

“The 5400 levels on the Nifty would now serve as very strong base with maximum concentration of puts at these levels,” said Desai.

There may be some upside left if one considers the historical price-earnings ratio for companies, according to Parikh.

“We estimate the Sensex earnings per share (EPS) to be around Rs1,260. India has traded at a median PE value of 15 over the last 10 years. This translates into a Sensex of 19000 at current earnings,” he said.