Sensex turns choppy after hitting 21,000 for first time in nearly 3 years

The Sensex touched the psychological mark of 21,000 today after a wait of almost three years but the gains could not be sustained. The stock benchmark was flat in afternoon session as traders booked profit at higher levels. (Track your stocks)

Significantly, the Sensex hit the 21,000 milestone when Diwali is just is less than two weeks away. The Sensex had closed above the 21,000 mark for the first time on November 5, 2010, which incidentally was Diwali.

In early trade today, the Sensex had gained as much as 272 points today to touch 21,039.42 and the Nifty too hit its nearly three-year high of 6,252.

It was on January 8, 2008, that the index crossed the 21,000 mark for the first time, hitting 21,078 in intraday trade, but closed below 21,000 mark at 20,873. Sensex had hit its highest intra-day value of 21,206 on January 10, 2008.

The Sensex has gained nearly 8 percent this month on expectations that the US Federal Reserve would delay its tapering due to the effect from the partial shutdown of the US government. The weak US jobs data for September also strengthened the expectations of a delayed Fed tapering.

The earnings season in India so far has been in line with expectations, with IT companies particularly exceeding estimates.

(Also read | Sensex@21000: Investors who gained, who lost out)

The inflows from foreign inflows have also been strong this month so far. Foreign funds have bought $1.7 billion in Indian equities so far this month, taking their total purchases for the year to $15.35 billion.

Technical analyst Sarvendra Srivastava told NDTV that the Nifty can hit highs of 6,350-6,400 levels soon. "There are signs of underlying strength in the markets. Traders should have stop loss at 6,028 levels," he said.

Fundamental analysts said this is a liquidity driven rally, which has nothing to do with the economic realities. "Over the last one year, some of the stocks such as IT and Tata Motors, etc. have done pretty well. However, a lot of stocks in the metal and industrial space have corrected significantly. So, it's not a broad-based rally," Sanjeev Prasad of Kotak told NDTV.

The sharp recovery of the rupee has also added to the market sentiment. The rupee has rallied over 10 percent since it record lows of 68.80/dollar on August 28. In afternoon trade, the rupee was trading at 61.43.

At 2.41 pm, the Sensex was down 77 points at 20,690 while Nifty fell 24 points to 6,153.