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Nikhil Faleiro in Bombay

There is an air of expectancy, a feeling that history is about to be made, among the stock market dealers and brokers of Bombay. The Bombay Stock Exchange resumed its upswing today and the 30-share benchmark, the Sensitive Index or Sensex, closed at an all-time high of 4905; earlier, it touched 4965 in intra-day trading. One more bout of buying, and the Sensex would breach the 5000 mark. Never in the history of Asia's oldest stock exchange has there been such a sustained rally as the current bull surge.

Last August, as the economy struggled to cope with the nuclear-related sanctions, marketmen bore the brunt as the Sensex plumbed new depths, often under the 3000 level. Point 5000 was unthinkable. Today, it is just a swing away from acquiring dimensions of reality.

Even last week, when the market fell by 100 points, rumours swept through Dalal Street that the income-tax department would raid a top broker and this would short-circuit the current bull run. Rumours became fears on news that a media expose is imminent about the alleged nexus between the Unit Trust of India and a leading bull operator.

Such fears, however, were allayed soon enough as rumours were traced to be the handiwork of a bear cartel. The BSE took the weekend amid expectations that shares would open firm on Monday. The rationale was that the worst was over. As more and more opinion polls indicated that the Bharatiya Janata Party-led alliance is all set to coast to a comfortable majority, the prospect of a stable government in New Delhi buoyed the spirits of marketmen.

Asit Mehta, director, Nucleus Securities, says, ``The rally is gaining momentum. The reasons are simple: the fundamentals are very strong and the sentiment is gaining ground. So with such a bullish rally, do not be surprised if new levels are achieved.''

The preparations for the Sensex assault on historic Point 5000 were done last week. The index had gained almost 225 points or five per cent during the week ended August 27 as retail investors went on a rampage.

Now, this week, the foreign institutional investors are expected to chip in handsomely as chances of a stable government brighten.

During the past one month, they had invested over Rs 330 billion in the Indian market and are eagerly awaiting the outcome of the elections. If a stable government does assume office, the FIIs are likely to step up their investments.

Richard Elsworth, CEO, ITC Threadneedle Asset Management Fund, says, ``With the signs showing more and more towards a stable government and with the clouds of political uncertainty moving away, do not be surprised if a flood of FII funds pours into the country.''

But there are also notes of caution that are being sounded by some analysts. If the Sensex breaches the 5,000 mark, selling pressure might ensue due to psychological reasons. But brokers discount this and say that financial institutions might step in to stall a 'reverse swing'.

The expectations are high, the sentiment positive. Brokers are hopeful that the current bull run will continue till Diwali, thus putting an end to three years of gloom that has depressed the market.

Mukesh Shah, vice-president, Gold Crest Securities, says, ``There are signs that the rally will be sustained. Do not be surprised if the market zooms into stratosphere."

The Sensex completes a 'hat-trick' of all-time highs

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