!!££!! CAIRN ENERGY enters the FTSE 100 !!££!!

Sizzling stock markets lure foreign funds

Agence France-Presse

Mumbai, December 31, 2005|12:56 IST

The stock markets are expected to open the new year 2005 on a firm footing, backed by foreign funds confidence in the India's economic growth story, sustained corporate performance and greater political stability.
With inflation and global oil prices easing, there are few factors which could put the markets under pressure, dealers say.

The benchmark Bombay Stock Exchange's 30-share -- Sensex ended the year at a record close of 6,602.69 against a previous week's close of 6,498.06.

The Sensex gained 13.07 per cent or 763.73 points in 2004 compared with last year's close of 5,838.96. From its year low of 4,227 hit on May 17 after the elections which saw the Marxist-backed Congress alliance score a surprise election victory, the Sensex has gained 56.1 per cent in just over seven months.

Foreign institutional investors were the largest single force in the Indian markets, making their presence felt with record investments of 8.51 billion dollars in the year, the highest since the economy was liberalised in 1991.

According to the market regulator, the Securities and Exchange Board of India, FIIs' net investments totalled $8.51 billion on December 31, 2004 compared with $6.59 billion the previous year.

"There is little to worry about at this stage. Now moving into the new year, foreign fund allocations, the corporate financial results and the next budget will be new triggers for the markets," said Vijay Tilakraj, manager at Cholamandalam Securities.

"Looking at the macro-economic picture, the Indian markets should remain a favourite amongst emerging markets in the new year," Manoj Kakaiya, dealer at ULJK Securities said.

An family ownership feud embroiling India's largest private sector company, Reliance Industries, hit market sentiment late November, but the stock bounced back after the company's board approved a share buyback proposal last Monday.

As the ownership battle burst into the open November 16, the Reliance Industries stock shed 13.37 per cent over four weeks to December 17. But then the stock gained ground and was up 13 per cent at Rs 533.8 rupees from its mid-November low.