The Hindu Business Line : Market puts behind its fears

A SENSE of pent up energy waiting to be unleashed permeated the dealing room. Fidgety fingers hovered over terminals as dealers and brokers, phones held close, waited for the zero hour. Number crunching began early in the morning as figures were already rolling in. Quips flew back and forth on as to how many points the market would tank by. For one factor was clear, the BJP would not be seeing a clear majority.

Yet there was no sense of doom in the dealing room, no reason to believe that there would be bloodbath on Dalal Street. As the time drew close for the onset of trading, the easy banter died down. It was action stations.

A moment of silence, the trading terminals flickered to life and the market opened with a 124-point drop. The narrow margin between the BJP and the Congress once again appeared to fuel fears of a hung Parliament. And even as one watched, the Sensex, in what appeared to be a knee jerk reaction to the exit polls, plummeted further; 190 points and it was still moving south. By 10.15 am, the Sensex had hit what was probably the day's low of 226 point.

PSU stocks were amongst the first to react negatively with weakness also pervading to cement counters. In contrast Reliance appeared to be on a buy mode.

However, as details emerged clearly indicating a single party at the Centre, fears of the `H' word started to recede. The immediate impact of this was evident with the market starting to recover from its lows. In a matter of minutes, the Sensex had retraced its loses by almost 146 points. "Forget Vajpayee, its `haath ka sarkar," quipped the head of retail broking of a leading domestic brokerage.

The market verdict was in. A Congress Government, with some outside support at the Centre - the Prime Minister designate being Mr Manmohan Singh.

As tensions eased, the easy banter was back and soon the `buy' and `sell' calls were peppered intermittently with comments on the unfolding political scenario. Commenting on the initial weakness, Mr Raamdeo Agrawal, Managing Director, Motilal Oswal Securities Ltd, termed it as a knee jerk reaction but was confident that as the day progressed one would see stability return to the stock market. "Going forward business will dominate the scene rather than politics," he reasoned.

Mr Nilesh Shah, CEO Broking, Edelweiss Capital, said markets don't like uncertainty. "With the Congress, there is a perception that reforms could slowdown. Then there is the speculation as to who would lead," he said.

He, however, said one could do value picking in such a market. "One could buy export oriented companies like Bharat Forge Ltd, United Phosphorous, Thermax, Cummis, ABB etc," he added.

While the market did go through an emotional coaster ride, dealing room sentiment in sharp contrast remained more calm and collected.

The bottomline being that the end of the day what matters is a stable Government at the Centre. This was later vindicated with the markets having ended the day on a firm note.

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