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Jayanta Mallick

OVER the weekend when the stock market was resting on the crucial resistance levels of the Sensex and Nifty, the Cabinet Committee on Economic Affairs finalised Rs 14,561-crore bail-out package for Unit Trust of India.

"This clear and comprehensive reassurance was overdue. The depressing perception overhang that UTI is a seller should now taper out. Last week, the market got wind of a package for UTI. This week, the formal announcement will definitely boost market sentiment," commented Mr Abhay Aima, a market analyst.

Mr Sunil Shah of HDFC Securities also echoed the same positive view. The proposed repeal of UTI Act would place UTI at par with other mutual funds. " UTI's liquidation of major holdings now can come about in an orderly manner with transparency," Mr Shah added.

Multitude of unitholders of the US-64 scheme can heave a sigh of relief as the Government package took care of the floundering scheme. "Most importantly, the country's largest mutual fund cannot be subjected to political considerations after the proposed restructuring," Mr Aima hoped. According to the market players, the part privatisation plan is expected to sharpen the professional edge of UTI.

The Finance Minister, Mr Jaswant Singh's assurance on Saturday that the separate bail-out package for two cash-strapped institutions — IFCI and IDBI — would also have an indirect positive impact on the market outlook this week, according to brokers and analysts.

"The other market worry over scant rainfall affecting the kharif crop severely is also gradually waning. Of course, there would be some crop losses. But the extent of damages would not be as scary as it was portrayed last month by some of the States competing for the Centre's assistance," said Mr Mathew Easow of matheweasow.com.

Already, market players have began talking about the return of the market confidence. However, the glitches over PSU disinvestment continue to be a spoilsport. Market analysts are keeping their fingers crossed over the outcome of the Cabinet Committee on Divestment on September 7. "The disgusting saga must end. The politicians should understand the simple axiom — time is money. And it is running out fast," observed Mr Easow.

The portfolio churning has begun in favour of IT stocks at the cost of PSUs, market players pointed out. If roadblocks on the way to disinvestment of BPCL and HPCL were not removed at the earliest, the whole process of valuation of PSU counters by the market would go hayware, they maintained.

Technically, the market saw a healthy sign after a long time last week. "The worst seems to be over and seeds of a clear broad-based trend reversal appear to have been sown," Mr Vivek Mahajan, a technical analyst, said.

According to him, some of the IT, FMCG and pharma stocks are looking good on the charts. "It is to be seen whether Sensex crosses the 3,200-3,210 level with ease. There could be a correction this week. The passage of Nifty to the zone beyond 1030 mark is crucial in this transitory phase. And after that a bull phase, led by IT counters, could be predicted with near certainty," Mr Mahajan opined.

Last week's record volumes in the Satyam Computer Services stock in the cash and futures markets raised quite a few eyebrows as the counter maintained a negative cost of carry forward position. Amid rumours that a FII, aided by a group of speculators, had bought heavily into the counter; the Satyam stock fuelled an upward move in the indices. For Infosys and Reliance, the market speculation was that LIC picked up substantial UTI holdings.

"The retail investors should remain cautious this week and only buy at corrections in fundamentally sound stocks," Mr Mahajan said.

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