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Heard on the street: Sensex eclipses Dow Jones
[March 29, 2006]

Heard on the street: Sensex eclipses Dow Jones


(The Times of India Via Thomson Dialog NewsEdge)NEW DELHI/MUMBAI: Dalal Street bulls finally went one up on Wall Street for the first time in more than 11 years. The Sensex surpassed the New York Stock Exchange's Dow Jones Industrial Average index, closing at an all-time high of 11,183.48 on Wednesday. The Dow closed at 11,154.34 on Tuesday.



On Wednesday, as mutual funds stepped up their buying ahead of the financial year-end to prop up their equity fund NAVs and speculators tried to keep prices at higher levels ahead of the close of March derivative contracts on Thursday, the sensex rallied 97 points to near the 11,200-mark. In contrasting style, on Tuesday, after the new US Fed chairman Ben Barnanke announced the first rate hike of his term, the Dow ended 94 points lower, below the 11,200-mark.

So does this signal that India has finally arrived in the big league of global stock exchanges? Not quite. For starters, as Amit Rathi, MD, Anand Rathi Securities pointed out, "Dow is not strictly a comparable index. While the sensex is a market cap-driven index, Dow is a price-based index."


Amitabha Chakraborty, head, PCG, BRICS Securities, agreed: "We can't draw any conclusions from this. It's just a psychological milestone that was expected to happen for sometime now."

But psychology and sentiment do matter in the market, don't discount this as inconsequential trivia. "Overall the market sentiment is positive as foreign fund flow is strong and ahead of the financial year-end domestic mutual funds usually buy to maintain their NAVs at a higher level," Chakraborty said.

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