Sensex May Hover Around 3400 Pts

Firm decisions, quick steps to improve the countrys infrastructure, quick clearance of pending legislations, and more sops for the market resulting in its revival are some of the expectations of leading stock market players that Business Standard spoke to. They also wanted politics and economics separated from each other. Cautious optimism marked their reaction to the president K R Narayanans decision to dissolve the 11th Lok Sabha and call for fresh elections.

A section of brokers said that the Sensex may witness a decline of around 100 points. The political factor has already been reflected in the share prices. The Sensex should hover around the 3400 levels in the coming days unless there is some drastic development at the centre. At the most, it could move 100 to 150 points either way, said Sanjeev Sanghvi, head of dealing, HSBC B&K.

We are looking at a drop of 10 to 15 per cent in major stock indices till the elections take place. The revival of the capital market will depend on the outcome of the general elections. However, a hung Parliament will result in a further fall, said Shankar Sharma, head of institutional sales at First Global Finance.

The Securities and Exchange Board of India chairman D R Mehta felt that the success of the MTNL global depository receipt issue has proved that investment decisions are taken by keeping the fundamentals in mind.

Despite the dissolution of the Lok Sabha, investors have shown faith in the fundamentals of the company, he said.

He added that even if no party gets a majority in the upcoming elections, the concept of supporting the government from outside may not be allowed in future.

A senior UTI official indicated that the market has already bottomed out. The maximum impact of the political uncertainty has been accounted for despite the fact that all policy decisions have to be put on hold. However, the market will stabilise at current levels, and any movement in an individual scrips will be strictly based on fundamentals, he said.

The market currently looks fundamentally weak but technically very sound. The reason is that there has been a fair amount of selling which has taken place in the past few weeks in anticipation of the worst. Thus the market is in an over sold position. So, in the near future, the indices will not witness a steep fall. We expect that the market will find support at 3390 levels, and, on the upper side, there will be profit booking at 3600 levels, said Maulick Sharedalal, a leading BSE broker.

Kishore Chaukar, managing director, ICICI Securities, feels that there will be no impact on GDR mandates which have been cleared by the Cabinet. A vote-on-account may take place and budget would be tabled in the last week of March. GDR issues like IOC, GAIL and Concor would sail through. The country is getting used to hung Parliaments. We are moving towards a scene where economics and politics will be seperated, he said.