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Jayanta Mallick

The general opinion among the foreign players is that there are fortunes to be made in Indian market in the next few quarters provided the social and the political firmament is not clouded.

IS the time ripe for profit taking and distribution? FIIs, whose liquidity has largely driven the market so far, are in the overbought zone. The street estimates suggest that they may end up the financial year with significant increase in the exposure.

But as of now, there is not much of an indication that they would start profit taking in the coming fortnight. Even if they start partial unloading, there seems to be enough takers including mutual funds and retail investors whose obituary was ready last year.

Technically speaking, there is hardly any evidence of reversal as yet in the domestic stock market. The November-end and early December may see profit taking by foreign institutional investors on year-end consideration.

However, the FIIs may not behave so predictably this year. Reason: positives are galore. Better corporate results (and guidance), bank rate cut on the horizon (market is expecting 25 to 50 points cut from the current 6 per cent), SEBI is alert and ensuring "market safety and integrity" (six months of rally and no major scam), GDP growth rate estimate is being revised upwards, rupee ruling strong and monsoon is good after three years.

Negatives are few and far between. Disinvestment process may have hit a roadblock a la HPCL and BPCL, but SCI stake sell plan is on course. The other possible negative could be the polls in four States, results of which may not be altogether favourable for the coalition at the Centre.

Interestingly, this time nearly half the active FIIs are new. Some of them are macro hedge funds willing to bet fearlessly.

In September, global funds operating in the Indian market earned a return of 29.4 per cent compared to 21.8 per cent South East Asian markets during the same period. At this point in time, the Indian market seems to be more lucrative than the US, Chinese and other Asian markets.

The general opinion among the foreign players is that there are fortunes to be made in Indian market in the next few quarters provided the social and the political firmament is not clouded.

This week, the tech stocks are likely to do better. (Interesting point to note: in the derivatives segment, last week saw volume rise in counters such as i-flex Solutions, Polaris Software, Satyam Computer and Masket by 355 per cent, 276 per cent, 192 per cent and 139 per cent respectively.)

Some mid-cap banking, cement, textiles, pharmaceuticals and auto sector stocks are poised for correction. The steel sector valuation looks stretched. The credit offtake has not shown a dramatic turnaround but on the NPA front there is clear improvement.

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