• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Jayanta Mallick

THE stock markets seem to have finally emerged out of the dark shadows of the Gujarat mayhem last week, though not entirely out of the woods yet. "Technically, the Sensex is expected to stay weak this week also. The heavyweights do not appear to be ready as yet to have a go," says Mr Ajay Jaiswal of Lohia Securities.

According to market players, the return of the divestment buzz in SCI and IPCL was to have livened up the market, but the prospects of one public sector company gobbling up another seem to dampen the spirit somewhat.

A section of market players argue that the long-term valuation unlocking process would be affected if a majority of the PSUs are allowed to be taken up by the other PSUs.

However, the contrarian view is that the bid price and management track record are the best criteria for divestment. "Why should the market be bothered about the ownership of an efficient company? In the long term, the management performance alone would decide the valuations. Moreover, today's acquirer may become a divestment candidate tomorrow," an analyst observed.

The release of the RIL officials on bail and reports of hike in prices of the company's products have lent some support for the pivotal. "The capital market attaches a lot of sentiment to the RIL stock for its large shareholder base," a National Stock Exchange broker pointed out.

However, the market as a whole has entered a meandering state simply because sellers are outnumbering buyers. The operators have turned cautious and foreign institutional investors are largely on the sidelines. The domestic institutions and mutual funds have turned highly choosy about buying and opt for profit-booking at the slightest opportunity, the observers feel.

With the results season mostly over and its initial effect on the prices taken care of, the market is likely to go in for hidden valuations in small and medium capitalised stocks.

Sectorally, the top tech stocks, which have technically maintained their valuations last week despite weakness in the US market, may see some offloading if the Nasdaq continues to show signs of easing further, Mr Jaiswal predicts. "However, if the top guns ease, the support is likely to come from the second and the third rung IT stocks," he pointed out.

The counters of Polaris and Rolta have seen a price rise and volume spurt last week. The talks of possible acquisition of Orbitech (a Citigroup outfit) by Polaris may continue to add fuel to its stock. Select small and mid-cap IT-enabled services companies may keep the tech indices ticking.

Among the PSU stocks, BPCL and HPCL may drift. But counters such as SCI, BEL and BEML are likely to move up. Interestingly, the market has come to treat the pharma stock as "defence counters" to hedge against the weak heavyweights. Last week, pharmaceuticals stocks lent a substantial support to the indices.

Analysts feel that if interest in tech stocks and other heavyweights wanes this week, the drug stocks can be expected to perform positively. "However, this could be reversed if the general sentiment moves the other way," Mr Jaiswal feels.

A consensus of opinion seems to emerge that the cement, bank and auto sector stocks are likely to witness a flat to mildly moving price trend. However, the stocks of auto ancillaries, media, hospitals and speciality chemicals companies are expected to attract attention.

Brokers feel that the Sensex and Nifty may remain range-bound. However, indices with bigger baskets are to show movement. According to some, scrips such as Apollo Hospitals, Samtel Colour and Wheels India may prove to be the dark horses this week.

Send this article to Friends by E-Mail

Stories in this Section
Equity investment norm for non-Govt PF scheme to stay

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line