Financial Daily from THE HINDU group of publications
Monday, Jun 07, 2004
Columns - A Ringside View
Dalal Street likely to see narrow movement
THE week ahead is most likely to see the key indices not venturing beyond a range. Last week, despite the Finance Minister walked the Street, market weakness could not be overcome.
Technically speaking, the indications of an on coming bear phase are growing stronger. As the stocks slipped from their peaks, they looked cheap and tempting. Is it an opportunity for buying or selling?
Some of the counters are still 200 to 300 per cent higher than their value about 15 months ago. Those who preach buying are obviously going slow. The sellers are more strident in their calls.
Between the speeches: When a politician meets a broker, the discourse is not restricted to weather, but when a Finance Minister meets the market fraternity, nobody indulges in discussing anything beyond the economic climate.
Mr P. Chidambaram's visit to Mumbai may not have dished out a magic for the market, but it will go down in the economic history of the country as a milestone for Dalal Street for reasons more than one.
While the first political gesture to acknowledge the stock market as a pressure group within the Rightist camp cannot go unnoticed, the reciprocation by the market players may not be dismissed as a mere civil response in public.
The market has also made an emphatic "political" statement on the economy, to be precise on the reforms, by opting for a bearish tone.Though the BSE Sensex added on 53.61 points, the Nifty 12.35 points and S&P CNX 500 put on 1.45 points over the week, the volume figures and movements suggested that real buying would only appear after "actions" on the economic front forge ahead.
The market breath for the last week remained negative. For every three stocks which went up, there were four that declined. The rise in the market on the last trading day was on a negative breath and may be interpreted as an exercise in index management by some quarters.
FII fund managers and local big brokers have deliberately been playing a waiting game for the time being. The deep pockets feel that it is worth taking a chance as the Union Budget is round the corner.
Is the bias for the selling a tactic to counter balance the Left and the labour unions' pressure before the Budget? None would officially admit it on the Dalal Street, but off-the-record concedes the obvious.
Sniff in a short time: The market regulator, meanwhile, had a quick look at the volatility including that on the historic dip on May 17 and reportedly found everything in order.
The clamour about bear cartel thus officially falls flat. But it will not die down. People have suffered losses and politicians may dig up, if found convenient, the list of sellers. However, it proved beyond doubt that the regulator can put an investigation on a really fast track, if necessary.
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