Sensex tops 18,000, but techs drop

India’s main share index climbed above 18,000 points for the first time in more than two years on Wednesday, propelled by robust earnings expectations and firm global equities.Companies in the world’s second-fastest growing major economy are set to report strong quarterly earnings, but traders said stocks were pricey after rising more than 70% over the past one year. Export-focused software companies extended their losses for the third day as the rupee tested fresh 19-month highs, deepening concerns their margins could be impacted. By 11:24am, the 30-share BSE index was trading up 0.21% at 17,978.30, with 23 of its components gaining. It rose to 18,008.40 in early deals, which was its highest level since 27 February, 2008. The 50-share NSE index was up 0.3% at 5,379.20. “Global cues and earnings optimism are pushing the market higher,” said Ambareesh Baliga, vice-president of Karvy Stock Broking. “But stocks are overvalued. It is getting to be a liquidity-driven rally.”The 14-day relative strength index of the BSE benchmark was at 70, the upper limit that indicates the market was overbought. The market has been boosted by foreign funds who have bought around $4.9 billion of Indian equities so far in 2010, adding to $17.5 billion last year.Automakers raced ahead on expectations consumer demand for vehicles would remain strong on the back of rising incomes. “Volume growth is expected to continue, driven by strong economic recovery, pent-up demand, increase in availability of finance and new product launches expanding the market,” brokerage Motilal Oswal said in a note. Top vehicles maker Tata Motors was up 1.7%, while carmaker Maruti Suzuki rose 1.2% utility vehicle leader Mahindra and Mahindra climbed 0.7%. Banks continued to rise on the long-term prospects in a buoyant economy. ICICI Bank and HDFC Bank climbed 0.1% and 0.4% respectively, while top lender State Bank of India was trading flat. Software services firms Tata Consultancy Services and Infosys Technologies that get most their revenue from exports declined 0.3% and 0.1% respectively on the rupee’s rise. Wipro shed 0.2%. Energy giant Reliance Industries, which has the highest weight on the Sensex, climbed 0.3% to Rs1,124.30.In the broader market, gainers led losers in the ratio of 2.6:1 on volume of 206 million shares.Baliga said investors were chasing shares in medium and small companies, driving them faster than the main index and possibly risking a bubble. The BSE midcap index and the BSE smallcap index have gained 5.4% and 8% so far in 2010, outperforming the main index that has risen around 3%.