The Hindu Business Line : Bullish undertone prevails on Dalal Street

NOW it's a train of questions or rather a train in question. Seeing the glint of light at the end of the tunnel over the securities transaction tax (STT) and the thinning the Left's (the Right also) opposition to FDI cap hike proposal for insurance, telecom and aviation, the market was back on the rails somewhat last week.

But the fresh political debate over the proposed inquiry by the Railway Minister into Godhra train mishap has created a situation where proceedings in the Parliament may be thrown out of gear.

If that happens, it could cloud the market sentiment this week. Otherwise, Dalal Street looks forward to a week that might finish with handsome gains.

Shapely numbers: Last week, the market closed on a bullish note. The market breadth was very positive as the number of shares that advanced was nearly twice that of the stocks which declined.

Major indices posted gains for the third consecutive week. The medium- and small-capitalised stocks have also started rolling.

Though the BSE Sensex moved by 5.69 points and the Nifty by 5.60 points over the week, the fact that the key indices could overcome the weakness caused by the STT blow and opposition to FDI limit raising proposal, was in itself a positive sign. Among the sectoral indices, the BSE index for consumer durables shot up by 9 per cent. The BSE-IT index score jumped by around 6 per cent. To top it all, traded volumes picked up significantly giving confirmation of return of a positive sentiment.

On the way up, the benchmark Sensex is expected to face the first resistance at a level between 5005 and 5015 points. In case of a fall, the immediate support is likely to come at around 4835 points level.

The short-term trend appears to be up and without any signal for a reversal. The medium-term trend has also turned up slightly. In the short-term perspective, the key indices crossing past their 20-day as well as 40-day exponential moving averages, is another confirmation for improvement. Textiles and infotech stocks continue to look strong. The PSU bank stocks may also start joining the party this week.

Timely response: The receptivity of the Finance Minister of the day helped the market to recover from the STT imbroglio, which cast a shadow on the volumes and prices in the early part of the last week.

The political face-off over deepening FDI channel of inflow into insurance may not, however, allow the IRDA amendment a clear passage in the Budget session of Parliament. This means that the FDI cap of 26 per cent in the sector would remain in view of opposition from the Left parties and the BJP.

Highly placed political sources in the Treasury and Opposition benches told this writer that the UPA is likely not to force the change for the time being.

The proposals on telecom and aviation need not require any parliamentary approval at the moment. The CPI (M)'s objection to small NTPC divestment is also of a technical nature and might be sorted out this week.

The play of monsoon and the unfolding drama starring Mr Lalu Prasad (in Godhra or fodder script) might show the way for market in the near future.

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