On Dalal Street, a handful of market operators changed the complexion of the weekly game, thanks to united alliance of market movers and the programme trading. The power of programme or algorithmic or cut loss or basket trading was in full display last week.

Combination of all such strategies resulted in a massive short covering, which, in turn, caused five per cent gain in the key indices. Market movers could create a virtuous cycle, bit by bit, through the last week, and the strategy paid off.

Will it be able to repeat the trick this week? According to market intelligence, the derivatives dynamics suggest that the operators would need to micromanage the derivatives and spot market realities on day-to-day basis. Their primary goal would be to try to keep the current movement range intact.

Fundamentals are unlikely to matter much this week; but the expiry of monthly contracts will. If the market psychology could be dovetailed towards usual profit booking, market operators should thank their stars.

It needs a lot of effort, planning and money to cause a short-covering rally. In the past few years, there had been several examples when market movers could force a sudden least expected rally.

It has also been seen that as long as market does not crash, regulatory actions do not come in the way of such “operations”.

The mechanism of “index management” and use of cross strategies simultaneously in derivatives and cash segment are not in the public domain. In the hush-hush world of market alleys, market intelligence tells us, coordinated market-moving actions, without raising regulatory eyebrows, are sophisticated operations. After May 6 crash on Dalal Street, operators have learnt their lessons in dos and don'ts.

Last week, market observers veered round the idea that significant short-covering was behind the Sensex and Nifty gains, particularly on Friday.

But how the indices reversed their direction? Did the fundamentals change over the week?

ICICI Bank, a component of two key indices (over 8 per cent weight on the Sensex), moved up smartly. It is interesting to note how some tried to explain the private bank's sudden upward thrust. For example, to Morgan Stanley's research team ICICI Bank, bitten down for a year or so now, last week seemed different and it felt the bank was poised to show profit growth.

Simplistic justifications were put forward for other gainers too. Profit growth expectations also changed for the software stocks, such as Infosys (second most weighed stock on the Sensex), Wipro and TCS.

These vendors, some analysts felt, “appeared” to reach a position of strength to command higher rates from their overseas clients. Parallel was strange absence of concerns over IT stocks' earnings in rupee terms as the week wore on.

Maruti and Tata Motors moved forward on sentiment related to Japan. Real estate stocks rose on “bargain buying”.

Nothing succeeds like success. Market movers had their week. But it would be a difficult task this week to hold on to their success. > jayanta_mallick@thehindu.co.in

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