The Hindu Business Line : Another healthy week for indices

In fact, every journalist, who tracks the market, knows that there is a parallel information channel in the market, which runs all sorts of news about stocks.

THE benchmark market indices should move up this week. The liquidity flow is good. The global crude oil price has come off its highest peak. The inflation is still reigned in. The expected petroleum product price hike is likely to be viewed by the market as an extension of reforms measure and not as a burden on the economy and industry. So, weather seems pretty fine for the key indices to scale new peaks this week.

Last week, the overseas funds pumped in decent bit of money on the local equities. The domestic mutual funds have also been maintaining their net investments at a steady level.

Interestingly, mutual funds are sitting on cash, estimated to be of around Rs 3,000 crore, which they have mopped up recently. If things do not go wrong, this money-in-the waiting will find its way into the market shortly.

The bullishness in the market is not restricted to the blue chip stocks, but has spilled over to the mid- and small-capitalised stocks too. The liquidity flow towards the counters in the bottom rung has been growing. The market is also on a constant feed of "good news" about the little-known and hardly-researched stocks.

Many small and mid-caps have also lined up fresh issues or are in the process of returning to the primary capital market at a hefty premium. When the stocks have already run up in secondary market and the appetite seems to linger, this is an ordinary event.

This also marks the beginning of another phase for smaller stocks in the bull market.

Regulators have sounded words of caution regarding market prices narrowing room for pointing an accusing finger at them in future. RBI's suggestion to the banks to keep an eye on the possible diversion of funds, particularly, working capital, by the corporates is poignant.

Market valuation, is vulnerable against manipulation of various forms, which among other things may also include news about a stock. The price sensitive information, in many cases, is routinely leaked to a section of market players. In fact, every journalist, who tracks the market, knows that there is a parallel information channel in the market, which runs all sorts of news about stocks. Some of them are downright false, some are exercise in half truths, some are misplaced and some come true later on. If they get into print, they are routinely denied.

What is often lacking is a systematic scrutiny between such flat denials (to the stock exchanges) and happening or non-happening of the event speculated upon. The stock exchanges also do not track mandatory declarations by corporates - both in terms of quality and quantity.

There are number of instances where companies get away with not filing updated results or shareholding patterns, let alone developments that may have a bearing on the price of the stock. Special categorisations of stocks, which demand extra-caution from the investors, have also lost much of their meanings in the current bull run.

In some cases, the prices have gone ahead of the fundamentals and assumed growth prospects. As long as greed rules the roost, things may not change for small stocks on the Dalal Street.

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