No Respite From Nervousness

The panic of the recent past continues to haunt the bourses. The markets are entering a zone in which traditional beliefs are being ground to dust _ the downward drift is leaving more and more pundits confused.

An interesting point made by a market observer of "a small bush fire becoming a forest blaze" seems to hold a lot of water.

The genesis of the downslide can be traced to the chain of international events that unfolded after the global strategist at the Golden Fund recommended a reduction in exposure to technology stocks.

Five per cent may appear as a small figure but what one needs to appreciate is the impact that is created when majority of the market participants line up on the sell side with very few on the buy side of the market.

Valuation rankings

Indian companies are definitely giving greater emphasis to shareholder returns.

The return on equity (RoE) which is measured as the ratio of net profit to net worth (excluding revaluation reserves) of the company is slowly gaining prominence.

A comprehensive study conducted by Pearl Brokerage has tried to highlight companies which have performed well on the parameter of shareholder returns. According to these rankings, the companies which top the list on the RoE benchmark are Max India, Digital Equipment and Castrol India.

The three have managed to give RoE's of 92.7, 63.9 and 54.8 per cent for the last financial year. A corollary is that these are the same companies which have high payout's.

Bellwethers weaken

With important bellwether stocks continuing to slide, the nervousness is only increasing.

First it was Zee Telefilms, then Infosys and now even Hindustan Lever is showing signs of weakness. While Infosys has yet to recover fully from Uncle Sam's sale of fifty thousand shares of the same, a substantial chunk of Zee Telefilms outstanding shares is believed to have been mopped up by One Man.

Contrarian not sighted

With stocks continuing to slide, even the so called hopefuls who could join the contrarian bandwagon are shying away. A reflection of the changing times is that even Junior Partner is no longer bearish.

What this clearly reflects is that while the majority feel that any further slide seems unlikely, a strong buyer is yet to emerge.

DSQ Software in focus

While most ICE counters have been melting in a big hurry , DSQ is showing signs of entering a consolidation phase . With a lot of positive news about the company re-surfacing, the scrip is believed to have caught the attention of speculators and investors alike.

Among the institutional deals at this counter, the Big Bull Brokerage picked up 50,000 shares of DSQ for one of its prominent institutional clients.

This was one of the reasons why the scrip managed to hold its own in a market with a strong bearish undertone.

Institutional prop

Big Daddy continues to provide support at lower levels. However, it has failed to get reflected in prices because the buy orders continue to be token in nature.

Among the buy orders executed were around 25,000 shares of Satyam and small chunks of other ICE stocks such as HCL Technologies, PSI Data and Global Tele-Systems.

Is the worst over?

The fact that even the risk-averse Helper in Death is providing support at lower levels does offer something to cheer about.

However, until and unless the lost confidence emerges with renewed vigour, a dramatic shift in sentiments seems unlikely.