Financial Daily from THE HINDU group of publications
Monday, Jul 15, 2002
Financial Daily from THE HINDU group of publications Monday, Jul 15, 2002 |
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Markets
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Commentary Columns - A Ringside View Divergent trends emerging Jayanta Mallick
THE S&P CNX 500, broadbased index of the currently active mid-cap stocks, is inching up towards its 15-month high of 815. Last week, it closed around 784. According to analysts, once it crosses the 815-mark, the next resistance is around 1,100. "The index is indicative of the stock market's present disposition. The underlying bullishness stems from the second-rung stocks, which have been thriving on value play," said Mr Mathew Easow of matheweasow.com. According to Mr Vivek Mahajan, a broker-analyst, S&P CNX 500 is poised positive even though the sectoral growth stories have gradually been replaced by price trends in individual stocks. "Overall, the market is signalling a mixed trend. In each sector, be it pharma, cement, technology or auto sectors, divergent trends are discernible. Interestingly, according to the technical charts, Sensex and Nifty may move in opposite directions this week. The Sensex is likely to hold, but Nifty may weaken," Mr Mahajan observed. The market is looking forward to the monsoon session of Parliament, which will start this week, to unleash a set of policy actions. "Markets normally are wary of Parliament sessions because of passage of Bills getting delayed or postponed due to prolonged stalemate over political issues. Valuations go haywire if an expected piece of legislation in put on hold. This time round, the market feels the bunch of pending Bills will be cleared without much hassle," Mr Easow said. The disinvestment process is also expected to gain momentum. "The inter-Ministerial differences over BPCL's proposed public issue is likely to be resolved as the Government seems to be waking up to the reality that the stock's valuation is being affected," an institutional broker observed.. According to analysts and market players, certain stocks in soda ash, fertiliser, dyes, private banks, cement, auto and paper are likely to draw attention. However, the general consensus is that a rally covering whole of the sector players was unlikely. The valuation of technology stocks is likely to undergo a downward trend mainly because of the decline in the tech-heavy Nasdaq Composite and the Dow Jones Industrial Average. "The controversy over the Rolta balance sheet is also likely to influence sentiment for the tech sector stocks", feels an analyst. According to some brokers, the research reports proffered by certain FIIs and broking outfits on Rolta recommending `buy' a few weeks ago are now being questioned. Investors and day traders are definitely alert to and suspicious about such research reports which talk about stock specific target price and growth prospects. "The recommendations should follow disclosures about holdings in the particular stock. But more importantly, the organisation or institution, which had earlier made `buy' recommendations, should make disclosures when they exit that stock," Mr Easow felt. The market worries also hang on over-built up positions in some speculative stocks. "Some FIIs and broking outfits have been looking for opportunities to offload their huge positions. If they have their way, those stocks are likely to crumble," a NSE broker said.
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