The Hindu Business Line : Volatile condition may prevail at Dalal Street

The benchmark at Dalal Street is likely to remain volatile this week. Last week overseas fund had been positive and local mutual funds were also net positive in their investments.

Investment strategists gave indications that reduction in positions in some blue chip stocks may lend volatility to the Sensex and Nifty.

Mid-cap stocks, which have displayed firm trend in the past couple of weeks, may also see profit booking. Particularly, the mid-sized stocks which are in the present in the derivatives segment are likely to feel a selling pressure.

According to the Street observers, many fund managers have postponed their investment plans until the first week of December because of tactical reasons. It is expected after the expiry of November contracts in futures & options segment, another wave of fresh investment may come in from the overseas investors.

As indicated in these columns last week, FIIs primarily directed the movement in the benchmark indices. A set of foreign investors are giving strong support to the Sensex and the Nifty basket on value opportunity.

Growth discounting

Meanwhile, a distinctive strategy of growth discounting by large domestic brokerages and fund houses appears to be emerging. Tracking and market making activity by the local biggies are seen to be expanding deep into small and even some micro-cap stocks, supposedly having strong fundamentals but very low P/E ratio.

Recent research reports suggest that the new finds are in the buzzing sectors of infrastructure, housing, engineering, banking, IT, chemicals and metals. The news flows, particularly regarding merger and acquisitions, from the small companies in these spaces have also recently gone up many fold.

Egged by institutional brokerages, a substantial number of FIIs have also entered or increased their stake in select small-cap stocks this quarter.

The retail investor and traders dominated small cap stocks have also been showing greater liquidity as a consequence of greater churning.

More Stories on : Stock Markets | Outlook | A Ringside View

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Easterlies relenting, buzz shifts to Arabian Sea

Ethanol-petrol programme yet to take off nationally

`Keen on comeback, weighing options'

MRPL to roll out retail plans

Second-hand vessels selling high

Top brokers upgrade target price for Corus

Few surprises at CAT this year

Hospitals see IT as growth tool

Gold may be range-bound

Banks put up good show in Q2

Volatile condition may prevail at Dalal Street

Afraid of fraud? Go for chip-based card