Technology Scrips To The Fore
This week is crucial for global markets ahead of the meeting of the Federal Reserve Board. The broad consensus at this point in time is that the status quo on the interest rate front would be maintained.
In the near term for funds investing in the domestic market, the rupee would be a crucial parameter to watch. While a depreciation of 6 to 8 per cent is in-built into the calculations of most offshore investors, the latest bout of volatility has made most funds adopt a more cautious approach.
Media and tech back in favour
Satyam Computers and Zee Telefilms have emerged as the major stocks, leading the latest revival in stock prices. Zee is a counter which had witnessed relentless selling by most instituions. With the scrip having been beaten down badly, the only bulls in the counter was One Man and the Baby Bull.
However, close to a million shares of Zee Telefilms have being picked up with the Prudent Fund emerging as one of the large funds on the buy side. The scrip has had a sharp rally aided by players who have decided to make the most of the latest bout of upward momentum.
Satyam Computers, which was in the no delivery period because of the stock split, has been the other big gainer during the past couple of trading sessions.
With talk of fresh orders doing the rounds, the stock has again emerged as a favoured stock of funds during the past few days. While Jordan Brokerage was the dominant buyer during the no delivery period, the likes of Savvy are
also believed to be in the thick of action now.
Cyclical turn
With oil prices shooting through the roof , it is only a question of time before the cyclical stocks take a hit. This has prompted funds who were planning to allocate a greater proportion of their assets to this sector to do a quick rethink.
As a result, the likelihood of fresh money flowing into this sector has again taken a hit.
Defensive play
Having witnessed the rather quick meltdown in ICE (information technology, communication and entertainment) stocks, a defensive ploy becomes crucial. And the sector's emerging as the front runners to fill this slot are fast moving consumer goods and pharmaceuticals. But funds which are caught up in a race to outperform each other as also the traditional indices have yet to firm up their beliefs on this front. In short, the need for a defensive strategy is well understood only the extent to which the same should be played requires firming up.
Interesting thoughts
One of the complaints of most investors is the absence of a large number of long-term players. The absence of players with a longer term outlook such as pension funds and insurance majors are dearly felt during periods of high volatility. Steps, which would speed up the participation of these long-term players, are urgently called for to increase the long term health of the markets.
If such steps are put into motion, the rather undue importance of select players would no longer be a bone of contention.
The other major kick start which the markets urgently require is words to flow into action on the divestment front. Dilly dalling has done a lot of damage to the value of even the good stocks in the public sector stable. It is here urgent measures are called for and the same are yet to come to fruition.
Finally, with the markets showing signs of perking up , the herd on the street is again lining up on the buy side. That's the time when caution is called for.