The Hindu Business Line : On defensive bet

ON a day when there was selling in most of the Sensex and Nifty stocks, FMCG major Hindustan Lever bucked the trend. The stock closed at Rs 130.60, up 0.31 per cent, on the BSE with volumes of 8.55 lakh shares and at Rs 130.80, up 0.42 per cent, with a volume of 22.52 lakh shares on the NSE.

Dealers said the interest in the stock came from investors who used the stock as defensive play in the current uncertain market environment. The talk is that several high networth investors parked their funds in the stock on Tuesday as they feel the stock could provide good returns from these levels at a time when there is across-the-board selling in the market.

Moreover, the talk is that the FMCG business has bottomed out and the first quarter (January-March) of the company would be better than previous few quarters.

HNIs switching it off

AFTER listing at a premium to the offer price, the stock of UTV Software is witnessing heavy selling from various market players.

Dealers said the selling is seen from institutional and other investors. But a major chunk of the selling is coming from high networth investors who had participated in the IPO of the company through borrowed funds. Since the cost of the borrowing turned out to be very high due to oversubscription, the fall in the stock price has forced these investors to sell their holdings.

Initially, the expectation was that the stock would cross Rs 200. However, market players said the fundamentals of the company are good and once the selling is over, the stock will bounce back.

On Tuesday, the stock declined 9.14 per cent at Rs 136.15 on the BSE with a volume of 4 lakh shares; on the NSE, it closed at Rs 135.50, down 10.53 per cent, with a volume of 8.02 lakh shares.

Margin calls trigger collapse

IT was another day of sharp fall in the stock prices. Dealers said the fresh selling on Tuesday came from investors whose margin calls were triggered.

The talk is that stocks valued at more than Rs 1,000 crore have already been sold under margin trading in the last three days. In case of further fall in stock prices, margin calls of more than Rs 500 crore could get triggered which could lead to further fall.

Another factor for the fall in the stock prices was the meeting of US Federal Reserve on Tuesdaynight. The fear in the market is that US central bank might raise the interest rates, which could slowdown FII inflows. There has already been a slowdown in the inflows this month from the FIIs.

Virendra Verma

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