• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Jayanta Mallick

The market is all about confidence and the indices are not necessarily the averages of fundamentals of the stock in the portfolio. Even as the key indices moved up from peak to peak, one can see appearance of hairline cracks in the current faith over the upward journey of indices.

There were signs of fatigue and distribution last week even though the Sensex piled up 142 points more to register a week-on-week growth of 3.39 per cent. The Nifty was 46 points or 3.04 per cent up.

The other interesting factor that has emerged last week was the marked disinterest in the mid- and small-cap stocks. Despite uninterrupted liquidity, the market showed the tendency towards huddling around the large-cap sector leaders.

The market current emphasis on the pivotals was evident from the fact that during the last week, the Sensex outperformed broad-based indices such as the BSE-500, the BSE-200 and the BSE-100. This is a clear trend reversal as in the 25-week long current rally, for the large part broader indices had outperformed the Sensex.

Last week, the marketwide advance-decline ratio was 115:88. Of the 30 Sensex stocks, 22 moved up. The FIIs, the principal driver of the market, have zeroed in on the Sensex stocks. Their exposures in the derivaties market have also been rising.

The overall buying interest in the Nifty October futures continued unabated till Friday. During the last week, Nifty futures trading witnessed a mixed trend but finally closed the week with a premium to the spot.

The total open interest in the derivatives market reached an all-time high at Rs 10,081 crore. Of this, the futures contracts accounted for 64 per cent. Relative to September series, the calls and puts in the October series have so far been subdued. Higher open positions, and a greater play of futures could be partially because of the new banking stocks, which have been introduced recently. Market players have used options contracts in the new stocks sparingly.

Introduction of the additional exposure limit by the National Stock Exchange for futures and options contracts, to be effective October 21on 19 securities including Tata Steel, Satyam Computer, SBI, ACC, Arvind Mills, Mastek, Syndicate Bank, Andhra Bank (all 15 per cent) and Union Bank (25 per cent), would provide the gravitational pull this week for the derivatives positions as a whole. This step would lead the players to reduce their exposures in the F&O segment this week.

This will also influence the cash market prices. The market is likely to witness a see-saw and correction in select stocks, but the overall sentiment do not indicate a slump. The short-term profit taking around the Diwali by the domestic players are well on the cards.

But, the FIIs are likely to step in as contrarians. In a relatively overheated market, the small investors, may love to restrain their greed. The traders also are likely to toe a cautious line. For the bulls, the Sensex journey beyond the 5000-mark is still round the bend.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Equity funds make more dividend payouts as markets improve

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line