Sensex crosses 37,000 for first time

MUMBAI: The benchmark BSE Sensex climbed for the fifth straight session on Thursday to breach the 37,000-mark, on expectation that earnings growth of Indian companies will accelerate.

The Sensex and the National Stock Exchange’s (NSE’s) Nifty 50 indexes ended the day at record closing highs, although the currently rally has been driven by a handful of stocks.

In intraday trading, the Sensex rose 203.39 points, or 0.55%, to a record of 37,061.62, while the Nifty 50 advanced as much as 0.48% to an all-time high of 11,185.85 points.

The Sensex closed 0.34% higher at a record 36,984.64 points, while the Nifty climbed 0.32% to a record close of 11,167.30.

The fact that the rally was led by a few top stocks bothered investors.

“It is a rally led by very few mega caps. It is an extremely narrow rally,” said Ajay Bodke, chief executive and chief portfolio manager at brokerage Prabhudas Lilladher Pvt. Ltd.

“The health of the market should be gauged from how the broader market is performing. If we look at the BSE mid-cap and small-cap index, separately, the other indices are sharply down from their record highs.”

The BSE mid-cap index and small-cap index are down 13.96% and 19.21%, respectively, from the record highs on 9 January and 15 January.

“Essentially, this is not a healthy development from a longterm perspective,” Bodke said. “The top stocks are getting too expensive and may not be able to help sustain the rally for the index. At some point, value migration will come into play.” He added that earnings growth is the only hope, especially when the macroeconomic situation is not promising.

Early corporate results indicate a revival in consumption and business sentiment, as the economy settles down after the implementation of the goods and services tax.