Financial Daily
from THE HINDU group of publications

Wednesday, July 04, 2001



Markets | Next

Rolling settlement run over volumes

Aarati Krishnan

THE first day of trading after the transition to rolling settlement has certainly been low key for the markets, with trading volumes plummeting sharply. With effect from July 2, 409 stocks changed over to rolling settlement on a T+5 basis.

The others will be traded with a uniform settlement period across exchanges, smoothing out arbitrage opportunities between exchanges.

In fact, the action in the markets over the past two weeks has centred around this event, with volumes winding down slowly and the stocks slated for the transition moving listlessly. With the large cap stocks under the shadow of rolling settlement, sever al small and mid caps have gathered steam over this period.

*Jayant Agro, Balaji Telefilms and Tata Telecom have been among the consistent gainers of the last fortnight notching up gains of between 25 and 38 per cent.

*Reports of a good monsoons appears to have infused fresh life into select FMCG stocks. Index heavyweight, Hindustan Lever, has held remarkably steady over the past fortnight, despite the listless markets. The stock has moved up from Rs 190 to Rs 204 lev els during this period.

*Similar is the case with Nestle India which has risen from Rs 530 to Rs 550 levels during the course of the past two weeks. Reports of a proposed stake hike in the Indian arm by the parent has been doing the rounds for over a year now; but there has bee n no confirmation of this from the company.

Corn Products (now International Bestfoods) has risen from Rs 118 to Rs 132 levels over the fortnight. Consequent to the acquisition of a controlling stake by Unilever, the company is to be merged with Hindustan Lever. The proposed swap ratio for the mer ger has been favourable to International Bestfoods.

*Reckitt & Colman India and Dabur India were exceptions to the trend, with both stocks shedding value over the past fortnight.

*Automobile stocks have borne the brunt of the meltdown of the past two weeks. News of a shortened working week has impacted the Mahindra and Mahindra stock. On the other hand, declining tractor sales have also taken a toll on Escorts.

Recent data released by the Tractor Manufacturer's Association shows that tractor sales dipped by 19.6 per cent in May 2001 over the previous year and by over 17 per cent in the April-May 2001 in relation to the same period last year.

*Other companies, whose fortunes are closely linked to the auto sector, have also been meted out rough treatment, with MICO and Exide Industries also losing value.

*Proposed buyback programmes sparked some interest in John Fowler, Carrier Aircon and India Nippon Electricals, even as prospects for these sectors looked none too bright.

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