When Funds Are Away, Punters Will Play

With fund managers barely interested in Indian markets at the moment, the ball is once again in the speculators' court. Since the past couple of trading sessions, speculators are back in the ring. They seemed to have split the day's trading sessions into the matinee and the noon shows.

The first session from 9 to 12 is the matinee show. This is when operators run the market either on the basis of news that has appeared in the morning newspapers or as per their mood. After 12 o'clock, when London opens, operators move in tune with the orders flowing from there.

The UTI club

There is a common complaint against the UTI: whenever the institution buys aggressively in a falling market, players bemoan that the UTI is doing so at the behest of the government.

Whether true or false, this syndrome is not restricted to Indian markets alone. It is learnt that a leading Singapore-based fund that was selling out of India was doing so at the behest of the government of that country.

With the markets in Singapore having come down sharply, the government has asked the fund to pump in funds to boost the sagging home market.

Big deal

The Marico scrip witnessed a negotiated deal of 5 lakh shares on the BSE yesterday. The buyer of the lot is reported to have been Warburg Pincus, which had recently obtained an FIPB approval to pick up a 10 per cent equity stake in the company.

According to market sources the first tranche of shares have been placed with the fund. The seller of the lot is believed to be a BSE brokerage which also has a merchant banking arm. The deal which was done at around Rs 277 levels, did not create ripples in the market as it was done through the negotiated window.

Ten per cent of the company's equity works out to 14.5 lakh shares. This means that the fund still has to pick up another 9.5 lakh shares from the market.

The ITC scrip continued to witness buying interest yesterday, too. Already a leading domestic fund is reported to have picked up between 15-20 lakh shares of the scrip over the past few trading sessions.

The penalty in the excise case to be announced today is reported to be close to around Rs 270 crore, while the company has already paid Rs 350 crore. The excess amount is expected to be refunded to the company soon. Watch for the stock to rally.

Survival of the fittest

Given the hectic volatility at the bourses these days, even fund managers are finding it more attractive to punt rather than go in for investment buying. At every rise, these funds offload part of their holdings in certain stocks. As soon as the price drops, funds then buy the same stock again.

In short if there is a stock you want to buy at lower levels, dump some of the existing shares in your portfolio. Once the price falls, accumulate the stock once again. A lot of funds, including leading domestic mutual funds are believed to be resorting to this trick.

Penny wise, pound foolish

Fund managers are reported to be booking profits in most of the heavyweight software stocks while making select purchases in second line stocks. Though it is too early to say whether there is institutional interest in second line stocks, the current trend at the bourses is that B group stocks are on the uptrend while mainline software stocks are at best stagnant.

Any takers?

A domestic brokerage which has a US tie-up is reported to be very bullish on the Telco scrip despite market outlook on the stock being very bearish. It is reported to be aggressively recommending the stock to its clients and institutions.