Financial Daily from THE HINDU group of publications
Monday, Mar 06, 2006
Financial Daily from THE HINDU group of publications Monday, Mar 06, 2006 |
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Stock Markets Markets - Outlook Columns - A Ringside View Liquidity still positive Jayanta Mallick
Both Mr P. Chidambaram and Mr Bush have opened the psychological floodgates for Dalal Street. A substantial increase in domestic and overseas fund flow last week was an indication of a change in gear on the Street. More than fundamental or technical factors, the upbeat sentiment and consequent rise in liquidity may dictate the movement in the indices this week.
No liquidity breaks
The FIIs seem to have been fascinated more by the Indian equities after the Economic Survey and the Budget proposals, announced last week. The Railway Budget in the previous week had prompted them to pump in fresh money worth Rs 1,001.80 crore in a session. Throughout the last week, FIIs scaled up their gross purchases and remained strongly in the net positive territory. After the Indo-US deals on Thursday, the gross buying by FIIs peaked to a record of Rs 2,272.90 crore and the net investment figure on that day stood at Rs 645.70 crore. Overseas funds so far in 2006 have made a net total investment of Rs 12,305.30 crore. The domestic mutual funds, on the other hand, were forced by the rising indices to reverse their investment strategy. They distinctly turned net buyers and joined the party. As predicted in these columns last week, the local fund managers opened up the taps dropping the pretence of being market savvy contrarians. Huge fresh cash, collected recently, became too hot for them as market capitalisation soared to new highs everyday. Whatever the market direction may be in the short term did not matter. Looming apprehension of being late (perhaps, too late) and dubbed as under-performers hardly left them any choice. SEBI statistics are instructive. Even on last Monday, they had collectively pumped out Rs 149.51 crore (net), not an insignificant amount going by their daily records. But, from Tuesday onwards, their net cash bets turned positive and begun rise. From a modest Rs 59.65 crore of net investment on Tuesday, MFs' net figure shot up dramatically to Rs 217.33 crore on Wednesday. This was followed up by Rs 204 crore on Thursday and Rs 135.31 crore on Friday. At the end of February, MFs were net sellers (Rs 245.56 crore) collectively. After first two days of March, they are now on the buyers list.
Without brakes
This week, among the likely movers, the heavy vehicles stocks could be in the lead. After the recent Supreme Court verdict on (maximum tonnage) trucks, the demand for these transport vehicles has surged. The truck freight rates have gone up by around 60 per cent since the direction. The demand-supply mismatch, according to industry sources, is likely to stay for a few quarters. Punters are obviously seeing a new opportunity to drive up the valuations.
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