Fall No Further?

The penultimate session before the rolling settlement regime comes into force and the compulsory squaring up of all outstanding carryforward positions saw a tug of war between the bulls and the bears, with neither managing to make much headway, but nevertheless, not conceding any ground either.

The bulls in the market these days, without doubt, are the funds, for whom it is very essential to prevent values from falling any further, especially at a time when they would have to report their NAVs.

The largest mutual fund in India would have to factor in the closing rates as of tomorrow for the calculation of its NAV, something which would be closely watched by all, since the health of this fund has huge implications on the market as a whole.

Pillar of strength

Infosys managed to hold rock steady with both the Big Daddy and the Sovereign Singaporean coming forward to support the counter.

With both these funds having huge stakes in the stock, it was but natural that they would step in at a time like this when a forced unwinding of positions could see the counter crashing.

The buying seems to be more in the nature of providing a stabilising effect rather than any new fundamental change of view on the stock.

Both the funds are estimated to have purchased between 60,000 - 75,000 shares of the stock between them.

The Sovereign Singaporean fund, already overexposed in the counter with a holding of almost 35 lakh shares, is known to trade in the stock with a view of reducing its holding cost.

But Big Daddy's buying, if it continues for some more time, could well be considered as positive for more reasons than one.

SSI - confusing signals

The recent decision of SSI to borrow about Rs 50 crore has made many analysts and broking houses to review their position on the stock.

The move to borrow, despite the strong cash position of the company, is being viewed with scepticism even though the company has clarified that the borrowing is at a considerably reduced rate of interest than its deposits.

The other decision of the company to gradually convert all its owned centres to franchisees in a bid to raise cash, though not inherently bad, is once again raising questions as to the reasons why the company is in an overdrive to raise its cash balances.

The Servant of God brokerage in its latest report, though, has downgraded the stock to 'underperformer' since its education businesses are perceived to be facing pressure on new registrations due to predominant focus on short-term courses.

It also says that although its software services has a healthy client addition, the repeat business is less than satisfactory.

All these negative views come barely a month after the King Kong brokerage had put a buy on the stock due to its compelling valuations with a target price forecast of Rs 750.