Financial Daily from THE HINDU group of publications
Monday, May 01, 2006
Financial Daily from THE HINDU group of publications Monday, May 01, 2006 |
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Markets - Outlook Columns - A Ringside View Jayanta Mallick
Bull's eye Money flow to India-dedicated or India-weighted funds had not slowed down Overseas fund managers feel that the last few weeks' movement on Dalal Street was reassuring
ACTION-PACKED: A scene at SEBI office on Thursday after the market regulator banned 24 key operators in connection with the IPO scam. - Paul Noronha
If you had not thought of taking your hat off to the market regulator in 2001, this time you may. It has shown the courage to take the bulls (fake ones?) by the horns and remain flexible at that. In a rare and deft handling, the watchdog last week helped Dalal Street pass through a crucial test. The market reciprocated by giving a thumping vote of confidence. The IPO fraud investigative process so far not only proved that the SEBI has come a long way since the last major securities scam, which changed rules of the game for equities trading and financing in the country for the good, but it has also been on a upwardly leaning curve in sync with the racing benchmark indices. In the end, as predicted in these columns, the BSE Sensex consolidated around 12K. FIIs indeed turned net aggressive buyers (on Thursday, the net investments by the FIIs were Rs 2,514 crore, highest so far this year). Despite high volatility, liquidity flow did not slow down. The local mutual funds, LIC, UTI, HNIs and corporate treasuries took advantage of the sharp dips and picked up stocks in the large, mid and small-cap segments.
On firm ground
Market is clearly on a firmer ground this week and the short-term outlook appears more positive than that before the beginning of the last week. As the result season nears its end, market would soon begin to look beyond the current valuation of the quality stocks, depending growth premium calculations for each individual stock. In terms of benchmarks, investors - both domestic and overseas - do not seem to have any problem ascribing a higher P/E for a medium to long-term period. Even though global investors were wary of emerging market equity funds of late, money flow to India-dedicated or India-weighted funds had not slowed down. The FIIs registered in India, after a recent bout of profit booking, appear geared for fresh pickings. A number of overseas fund managers felt that the last few weeks' movement on Dalal Street was reassuring and distinguished India from the other emerging markets on a scale of maturity. It may generate further interest among the global investors for Indian equities. Participation of domestic retail and institutional investors is likely to grow in the short term as a sense of relative safety gains ground. As a result, this week may see higher liquidity and the return of the momentum.
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