While the Sensex figures would sound bullish, that is far from reality. The Sensex since 2008 has rallied on the back of select stocks like Sun Pharma, Tata Consultancy Services, ITC and Hindustan Unilever. In fact, stocks like ITC have almost doubled since 2008. If that happens it pushes the Sensex higher because ITC has got the largest weightage in the Sensex.

In fact, stocks like Reliance industries, Bharat Heavy, Larsen and Toubro, State Bank of India, Bharti Airtel, Tata Steel and several other stocks are nowhere close to their peaks of 2008.

The broadbased market including several mid cap stocks are still languishing. PSU banks are nowhere near their peak levels and so also for stocks from the real estate and steel sector.

Clearly, the markets have run up on interest in select stocks. In fact, it's purely stocks that foreign funds have been betting on. Foreign funds net bought shares worth Rs 1875 crore on Thursday, their biggest single-day purchase since May 21.

These set of investors continue to chase stocks from the IT and pharma pack, pushing stocks from these sectors and hence the Sensex higher. So, the real story of the new Sensex record can be attributed to almost the doubling in stock prices of HUL, ITC, TCS and Sun Pharma, while many other stocks languish.

How far the markets will rally on foreign fund buying is difficult to tell. While big investors are making hey while the sun shines, small investors need to be cautious.

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