Financial Daily from THE HINDU group of publications
Monday, Oct 21, 2002
Columns - A Ringside View
Measured buoyancy seen
SIGNALS of the bearish phase in the stock markets ending are getting clearer. But according to some analysts, the market is still somewhat anaemic; poor liquidity seems to constrain overall activity.
According to Mr Abhay Aima, an analyst, unless the margin trading takes off in full scale, the market is unlikely to regain strength.
"No doubt, the market has entered a positive territory and is likely to remain firm this week. But, it will be slow in gaining momentum because of poor liquidity. The badla financing has not been substituted adequately by the margin trading mechanism as the banks have stuck to a very low-key role," Mr Aima observed.
However, a section of market players and analysts feel that last Friday's trading volume (combined turnover of around Rs 4,600 crore on the Bombay Stock Exchange and the National Stock Exchange) was a pointer to the fact that fund managers and high-net worth individual investors had begun warming up for a possible bull run in the near future.
In the opinion of Mr Vivek Mahajan, a technical analyst, the indices are indicating that the markets are in an interim uptrend. To put it simply, the market this week may witness measured buoyancy, but not a bull run. "The likelihood is that institutions and funds will join the bus soon and help the volume growth. They would not like to miss the party down the line," Mr Mahajan commented.
Mr Saumil Trivedi, another technical analyst, however, held out a bearish outlook for this week. According to him, the BSE Sensex has not been able to take a decisive direction last week. The bias of the benchmark index may be towards weakness this week, he opined. In Mr Trivedi's view, the Sensex level above 3,015 points on Monday may provide it strength to push ahead. The index needs to stay above 3,070 this weekend for a confirmed upward trend.
For Nifty, Mr Mahajan's prediction is that it may close the week between the two resistance levels of 985 and 997. "The worst seems to be over. But some of the large-cap stocks such as Wipro and Infosys may see a mild correction."
The brokers and dealers generally foresaw a week of range-bound, choppy movements. The overall outlook remains mixed for the week.
According to Mr Mahajan, top pharmaceuticals are likely to be in a bearish phase and weaken. Among the auto stocks, Tata Engg is signalling an upward trend on the charts, while Bajaj Auto, whose Q2 result is due this week, may witness a `bear rally' (very short upward movement). Cement shares, particularly, L&T, ACC and Gujarat Ambuja may prove to be winners. "L&T is likely to cross and stay above the Rs 190-mark, the open offer price declared by A V Birla group," he said.
The other likely movers are HLL, Balmer Lawrie, BEML, ONGC. The retail investors may look for opportunity to enter in fundamentally good stocks on corrections.
According to Mr Devesh Kumar, Chief of the Equity Research cell of ISEC, the Q2 results are likely to dictate terms this week. "There are very few negatives to affect the market in the immediate term," Mr Kumar pointed out.
The scheduled results announcement from Cipla, Dr Reddy's, TVS Suzuki, Bajaj Auto and HLL will set the tone for the respective sectors for the short-term. Software stocks are likely to remain firm despite some technical correction, the market observers say. (Mr Mahajan has investments in ACC, L&T, Tata Engg, Tata Steel and HLL.)
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