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Rediff Money Bureau

At 14:57 hours Indian Standard Time on Friday, the Sensex, India's premier stock market index, breached the 6000-point barrier for the first time in its 20-year-old history. Still-fresh memories of October 8, 1999 -- Friday! -- when the Sensex touched and surged past the long awaited 5,000 level for the first time, flooded the marketmen's minds. The BSE bigwigs had then unleashed a riot of colours in the form of 5,000 balloons to celebrate the landmark event. But today, within nine minutes after the historic moment, the index plummeted to 5940 points. It was as if the bulls were waiting to unload at this level. Profit-taking ensued, pushing the Sensex further down to close at 5932.98 points.

The Sensex opened at a healthy 5985.05 points with many pivotals at the upper end of the circuit. Heavyweights Infosys and ITC were stuck at Rs 9962.95 and Rs 968.60 respectively, both up 8 per cent since early morning. MTNL was also frozen for most of the day.

The reason behind the rally is aggressive buying by foreign institutional investors. Finance Minister Yashwant Sinha’s statement that this year's budget could be harsh, seems to have been discounted by the market. The argument is that Sinha does not have a choice but to go on a major divestment spree. The market doesn’t expect major tax increases.

Infosys has been rising this week on rumours that it is close to acquiring a company in the US. But Infosys has scotched the rumour in a statement today. The company said it is not aware of the reasons behind the recent trading activity at its counter on the Nasdaq Stock Market where the share touched $ 528.50 (Rs 23,048). Infosys chairman N R Narayana Murthy said in the statement, "There are no new corporate developments outside of the company's normal business activities that may impact trading."

MTNL and BSES continue to rise as the emerging market Internet story is catching on with foreign investors. ITC is also rising because of its technology initiatives.

The Sensex decline in the ending session was due to the fall in Hindustan Lever and Reliance. HLL fell from Rs 2,410 to Rs 2,345 and Reliance declined by Rs 10 to Rs 358.60.

The market is divided on whether the present bull run could be sustained. Ambareesh Baliga, vice president, Kotak Securities, says, “The market seems overheated though the undertone is bullish. Healthy for market to correct from current levels before starting the next uptrend.”

Stockbroker Paresh Khandwala says, "The market will react by 300 to 350 points from the current level before the Union Budget, but even now there are some stocks that look attractive at the current levels."

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