Momentum takes the Sensex to 6900

The bull momentum continues unabated and the Sensex touched the psychologically important level of 6900 for the first time ever before closing at yet another all time high. The 30-stock Sensex has gained close to 5 per cent since last Monday when the budget was presented. Sensex closed at 6879, up 29 points and the Nifty at 2160, a gain of 12 points. The Nifty futures discount to the spot index widened to 10 points.

Crude ended higher at $53.78 on Friday boosted by bullish statements from oil cartel OPEC. On Friday, US markets rallied on strong job data for the month of February to their highest levels since the tech bubble burst in 2001. The Dow Industrial is very close to the important mark of 11,000. Indian ADR's had a good day with HDFC Bank gaining more than 3 per cent. Wipro and Tata Motors added 2 per cent each while Infosys and Satyam ended in the green. ICICI Bank remained unchanged while MTNL lost more than a per cent after Thursday's gain of 4 per cent.

The super heavyweights ONGC and Reliance led today's action from the front. After being under performers so far, both these stocks with large weights on the indices are catching up. ONGC has received government permission to invest in the Sakhalin-III oil field in Russia. Reliance plans to open at least 2000 retail fuel outlets by March 2006, while indicating that exports may be lower on increased domestic demand. Reliance is on the look out for oil assets in West and Central Africa. ONGC gained more than a per cent while Reliance gained more than 2 per cent.

Bank stocks were on fire with the BSE Bank Index hitting an all time high today. SBI surged more than 2 per cent to another 52 week high before closing with gains of close to 2 per cent. Punjab National Bank continued its upsurge as its public issue opened today to a good response. Traders are taking advantage of the arbitrage between the issue price and futures, which is at a substantial premium to the issue price.

Oriental Bank of Commerce announced its public issue at an indicated 20 per cent discount to the market price. The stock gained more than 12 per cent as this stock also offers arbitrage opportunity like PNB. But who is buying the futures at huge premiums when fresh supply of shares is coming to the market at a discount? Possibly a section of the market is expecting a strong rally in these stocks after the issue, as these issues will be heavily oversubscribed. Then again, this beats logic as these are listed stocks and not a fresh issue where the initial momentum can carry the stock for some time.

Most other mid-cap PSU banks, which are also present in the F&O segment, rose smartly. Canara Bank, Bank of India, Bank of Baroda and Andhra Bank gained substantially. Some of these banks are planning public issues to meet capital adequacy norms.