News: The year of bull - Sensex gains 47% in 2006

(RTR 29/12/2006) Mumbai - Shares slipped 0.4 per cent on the day on Friday but still ended the year up nearly 47 per cent, clocking their fifth straight year of gains on strong institutional inflows and robust economic growth.

Notable blue-chip winners in 2006 included cement maker ACC Ltd. and diversified Grasim Industries which rose more than 100 per cent, while top private firm Reliance Industries Ltd. gained nearly 89 per cent over the year.

Fund managers and analysts expect the benchmark index to rise further in 2007, with expected returns of 5-15 per cent as corporate earnings growth continues.

"The call would remain bullish, but the expectations of returns should be toned down a bit," said Sandeepa Vig Arora, vice-president at brokerage firm Indiainfoline Ltd.

Foreign funds, which have played a crucial role in powering the market to record highs, bought nearly $7.9 billion worth of Indian equities in the year, following inflows of $10.7 billion in 2005.

"Money would chase earnings growth and will largely be in capital goods, IT and consumer goods," Ved Prakash Chaturvedi, managing director at Tata Mutual Fund said.

Concerns of rich valuations and tightening monetary policy to curb inflation pressures have led to short-term corrections and analysts said the benchmark BSE index lost steam as it neared its latest record of 14,035.30 points set on Dec. 6.

The 30-share index closed 59.43 points lower on the day at 13,786.91 points on Friday, while the 50-issue S&P CNX Nifty lost 0.1 per cent to end at 3,966.40.

The market is closed on Monday for a national holiday.

Only nine blue-chips ended the day in positive territory amid low volumes but in the broader market gainers edged ahead of losers on volume of 201.6 million shares.

"There was lack of buying interest in the large-caps ahead of a long weekend. But some mid-caps have done well," said Gajendra Nagpal, director at Delhi-based Unicorn Investments.