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Jayanta Mallick

THE BSE Sensex last week gained marginally by 6.26 points. The probable scenario of this week is range-bound trading.

According market players and analysts, the market is plagued by lack of confidence and the resultant absence of buying interest. Even though every body in the market agrees that valuations across the board are cheap and yield prospects are quite high, nobody seems to muster the courage to make a clear bullish call.

The past week began with a positive note on the Muhurat day (the first day of the new trading year), but the market could not sustain the trend through the week.

The most interesting aspect of the current trading behaviour is that even the bears are unwilling to stick their neck out with sharp negative calls, which may create panic. "When every one prefers to be on the sidelines — be it foreign or domestic institution or mutual fund or even die-hard speculator — then you have a drifting market like this," commented Mr Vivek Mahajan, an analyst.

Dealers and brokers pointed out that the market's response to the Wipro announcement that it had bagged major software outsourcing orders from Lehman Brothers was lukewarm. The counter closed the week with a gain of less than five per cent.

According to Mr Saumil Trivedi, a technical analyst, the Sensex now remains delicately poised. It may end this week between 2,950 and 2,955 points. On the lower side, the benchmark index is likely to find a strong support level at 2,900. On the upper side, the stiff resistance lay at around 3,040 points, he opined.

Mr Trivedi argued that during the last week the Sensex level of 2,995 proved to be a stumbling block. This was exemplified on three sessions on Monday, Tuesday and Thursday, Mr Trivedi pointed out.

He also noted that in the last six hours of trading during the past week, the Sensex recorded hourly lows in the range between 2,950 and 2,955 points.

But why this weakness and apathy? Each segment of market participants appears to have their own reasons. The speculators are low-key as they fear that lengthening shadows of 2001 scam may touch a few more of their breed soon.

According to some market observers, the futures market sans deliveries are restricting volumes and liquidity in the market. "The futures market is yet to develop into full-fledged hedging mechanism," said a NSE broker.

Foreign financial institutions are waiting to see that speculators make the first move towards the recovery path. They also seemed to be bogged down by the unresolved Mauritius tangle. "Moreover, the economic numbers and political decisions in the recent past have not encouraged them much," observed an institutional broker.

Mr P.N. Vijay, a market analyst and member of the BJP's economic cell, said: "the FIIs appear to be worried about Government's policies, particularly about disinvestment. Quite clearly, some of the FIIs, who had built up huge positions in the certain PSU stocks, have of late been unloading".

The mutual funds continue to be reluctant in making any aggressive move. "In this situation, it would be unreasonable to expect that retail investors would come forward and take a plunge for bottom fishing'', Mr Mahajan observed.

According to Mr Vijay, traditionally December to March period witness a liquidity-driven rally in the domestic stock market. In his view, the Nasdaq re-rating of Infosys and the good news for Wipro and TCS, would buoy up the sentiment for the tech stocks this week.

"The market has already discounted the PSU disinvestment problems and the poor monsoon factor. The overall corporate results have been good in the Q2. The hardening of rupee against dollar may have a negative effect on the tech sector earnings, but the improvements in the billing rates and increasing outsourcing flow to Indian IT companies would perhaps outweigh the currency risks," Mr Vijay observed.

"On balance, this week's outlook is likely to cheer up and the Nifty may close around 970 points," he felt.

According to Mr Mahajan, the cement and second-rung pharma stocks look good on the charts. In his opinion, select stocks such as Tata Engg, Tata Chemicals, L&T, Wipro, Satyam Computer Services, Hughes Software, Novartis, Burroughs Wellcome and Castrol may provide investment opportunity for the retail investors. (Mr Mahajan disclosed that he had investments in L&T, Tata Chemicals and Telco.)

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