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Credit Lyonnais sees Sensex touching 8500

NetScribes/Salil Panchal

Here's something to pep up spirits dampened by the recent bear phase in the markets. Leading foreign institutional investor Credit Lyonnais says the Sensex is poised for a long bull phase, which could begin by the year-end or early 2001. In fact, it even expects the bull run to lead the Sensex to an unheard of 8500 mark!

Credit Lyonnais Securities Asia (CLSA), in its Marketwatch: India report issued late last week, says that the Sensex may have completed its bear market decline from 6151 in February 2000 to 3491 in October 2000.

The report sees the infotech and FMCG sectors emerging as strong investment avenues in the days to come. Credit Lyonnais has already begun accumulating key stocks like HLL, Infosys Technologies and Reliance Industries Ltd, the report states.

Credit Lyonnais has been accumulating HLL at below the Rs 180 level, Infosys at below Rs 6,500 and Reliance at below Rs 320. HLL is ruling at Rs 184, while Infosys closed at Rs 7,371 and RIL at Rs 302 on the BSE on Monday.

FIIs, including Credit Lyonnais, have been active buyers in the domestic markets in the first 10 days of November. This resulted in the Sensex going up from 3789 on November 1 to 4046 on November 9, 2000.

With the Sensex currently languishing at the 3820 level, 8500 may seem unattainable. But CLSA's bullish view on the Indian markets could be based on factors that other FIIs and MFs are also beginning to agree upon - the infotech story, the FMCG movement and some fresh buying in select Old Economy stocks.

According to marketmen, there is still a lot of upside left to the infotech sector. Also, there are value-investment opportunities available in some of the Old Economy sectors, particularly cement and infrastructure.

Most of the private sector mutual funds, including Alliance Mutual, Prudential-ICICI, Kotak Mahindra and SBI MF, have also been buying into these sectors this month.

Also, on pure technicals - following the Elliot's theory - the market could well see the commencement of a long bull phase.

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