Higher than ever

03 January 2005

Despite the crash in May, Indian stock markets scale to new heights. Pradeep Rane reports.

It was a historic year for Indian stock markets with the sensex scaling new all-time high, foreign fund inflows highest ever, largest ever IPO moblisation, and record number of new FII registrations. The widely tracked benchmark BSE sensex tested the 6,600-mark during the last week of December. The rally has been broad-based with both large-cap and mid-cap companies gaining substantially during the year.

The broader BSE-500 index gained 17 per cent in 2004, higher than the sensex's 12.4 per cent.

And a large number of stocks hit either lifetime highs or at least 52-week highs during the year.

The rally is largely driven by the massive fund flows from foreign institutional investors (FII), who are betting on the Indian growth story. They pumped in over $8.4 billion in 2004, surpassing the last year's figure $7.6 billion.

Also hordes of new FIIs registered themselves with the Securities and Exchange Board of India (SEBI) and the names include big players pension funds like California Public Employees Retirement System (CALpers). Over 140 new foreign funds entered the country — the highest number of FII registration in a single year since foreign portfolio investments were allowed into the country's bourses in early '90s.

The year also saw a massive market crash in May following the defeat of the BJP-led NDA government at the centre. On May 17, the BSE sensex caved in by over 500 points, the largest ever single day fall in the index.