Sustained buying by foreign institutional investors and selective buying by local funds pushed a host of stocks to their 52-week highs.

The barometer 30-share Bombay Stock Exchange (BSE) Sensitive Index (Sensex) surged by 122.49 points, or 3.8 per cent, for the week to 3,303.24, the highest close since 24 February 2003, as a result. The S&P CNX Nifty index gained 39.60 points, or 3.9 per cent, for the week to 1,046.40.

Last week's rally, which has been driven by sustained buying by FIIs, is an extension of the recent firm trend in the market. The Sensex has now risen 379.21 points, or 12.9 per cent, in just over a month - from 2,924.03 on 25 April 2003 to the current 3,303.24.

Marketmen hail this as a broad based rally, with stocks across sectors like pharmaceuticals, automobiles, steel, engineering, power, textiles, banking, cement, oil & gas and refineries being part of it.

IT stocks joined the rally last week on the strength of the Nasdaq. On Thursday, Nasdaq gained 11.36 points to 1,646.01, its highest level in over a year. The broad-based S&P 500 index has reached a near one-year high. The firmness in the US market stems from expectations of an economic rebound manifesting in the current year's second half.

The current spirited rally on the bourses has taken a host of blue chips to their 52-week highs or, in some cases, to multi-year highs/lifetime highs. Blue chip stocks that reached 52-week highs last week included RIL, SBI, Telco, HDFC Bank, Indian Oil Corporation, Ranbaxy, ABB and ONGC. For instance, Telco has reached a more than three-year high, whereas SBI has scaled to its lifetime high.

Some other stocks hitting 52-week highs are Bhel, Siemens, Thermax, Apollo Tyres, IBP, Union Bank of India, LIC Housing Finance, Eicher Motors, Mahindra & Mahindra, MRF, Sesa Goa, Cummins India, Grasim Industries and Gail India. There are a number of other side counters in the broad market that have scaled 52-week highs . Notable among these spring from the banking, steel, auto ancillaries and  pharmaceuticals sectors.

Sustained support from FIIs and acquisition of select blue-chip stocks by local funds is driving the market according to dealers. FIIs have stepped up purchases on the bourses of late, pumping in a huge Rs 476.90 crore in four sessions from Monday (2 June 2003) to Thursday (5 June 2003). This has taken cumulative inflows in calendar 2003 (which also includes inflows in the debt segment), to Rs 7,112.50 crore (till 5 June 2003). This was much higher than the inflow of Rs 3,088.10 crore recorded in the corresponding period last year. The inflow in this calendar year (so far) has already exceeded the inflow of Rs 3,677.70 crore recorded in the whole of calendar 2002.

In May 2003, FIIs made their biggest monthly inflow so far in calendar 2003, at Rs 1,220.80 crore. FIIs had pumped in a net Rs 887.90 crore in January 2003 but their inflows slipped later to Rs 378.60 crore in February, Rs 411.70 crore in March and Rs 430.30 crore in April 2003.

Expectations of a near normal monsoon this year, attractive stock valuations with good dividend yields and a low interest rate regime have triggered the current rally. The monsoon hit the country on Thursday in parts of the Bay of Bengal. Normally, the monsoon first arrives in Kerala around 1 June every year, and reaches the Bay of Bengal a couple of days later.

Though the monsoon has been slightly delayed this year in the southern region (it is likely to hit Kerala on 8-10 June 2003), the weather department has forecast a near normal monsoon. The monsoon plays an instrumental role in determining the fortunes of a vast section of the agricultural-dependent Indian populace and, thereby, rural demand.

However, the rally in the market has been too rapid and market men expect profit taking to set in soon. Stock specific buying is, however, expected to continue, according to dealers.