The Hindu Business Line : Block deals dip on cautious sentiment, FII profit booking

Mumbai, Jan. 31 The number of block deals that have happened has taken a blow due to the negative sentiments in the markets. The last two weeks have been rather volatile, with the Sensex recording its highest ever intra-day fall one day and then on another, its highest ever gain.

The overall sentiment in the market has been rather dicey, say market men. They say it is this sentiment that has brought about this volatility, and a drop in the number of block deals. “Block deals happen when people are buying, but now with the sort of sentiment in the market there isn’t much buying taking place, things are still a little dicey. As per the current market conditions there won’t be much of block deals taking place,” said Mr R. Balagopal, Senior Vice-President, Fedex Securities Ltd.

‘No buoyancy’

There is no buoyancy in the markets, feels Ms Anita Gandhi, Head-Institutional Business, Arihant Capital Markets Ltd. She says there isn’t much enthusiasm to buy as investors have become more cautious now. “The second half of this month was a rather turbulent time in the market, and the sentiment still remains jittery. Until the markets stabilise, we will continue to see a dip in the number of block deals,” said a Vice President with an Investment Bank.

FII selling impact

The selling spree of the foreign institutional investors is another reason why the number of block deals dipped, say market watchers. “The FIIs are in selling mode now, and when they start selling they sell rather ruthlessly. When the P-note issue happened, we saw a lot of block deals taking place. “This was because a lot of FIIs were switching from their participatory note accounts to the registered accounts, that resulted in number of block deals,” said a sub-broker with a brokerage in town.

Mr Balagopal said FIIs are being cautious right now as they have lost a lot as a result of the US sub-prime crisis. “The parent companies of the FIIs that invest in our country have somehow or the other been affected by the sub-prime issue. In order to book their profits, the FIIs are on a selling spree,” he explained