The Hindu Business Line : Bitter battle on the floor

According to the market grapevine, while one group was trying hard to hold the Sensex above the level of 5870 the other was forcing it down further. Several operators and retail investors had kept that level as stop-loss and once the index went through it they rushed to sell, accelerating the fall.

Both the groups are said to have strong corporate and political backing and a host of big brokers on their respective sides. A few foreign institutional investors that reportedly have domestic money routed through them are also lending support to the two factions, a market source said.

One dealer said the scuffle some times brought back memories of 2001. He however felt the market was stronger this time around.

Buying on declines

TWO large foreign brokerage houses were buying select stocks for three foreign funds, a market source said.

While one broker, who had reportedly said only on Tuesday that valuations of Indian equities were over-stretched, was seen shopping for two funds, another was buying for a single client, the source said. Foreign institutional investors bought equities worth about Rs 350 crore on Tuesday.

Redemption pressure?

DOMESTIC mutual funds also are buying equities along with their foreign counterparts, a dealer said. He said they were seen selling frontline stocks and buying at mid-cap counters.

A couple of mutual funds were said to have seen some redemptions on Wednesday. Even though some funds have reportedly told distributors to slow down sales, the inflows have not abated. New flows are forcing managers to continue to buy stocks even at high levels.

On Wednesday, domestic funds bought about Rs 80 crore of equities. A dealer said investors might begin pulling out of equity plans if the market continues to decline. —

Dinesh Narayanan

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