Heavy Unloading Improves Valuations

The heavy selling witnessed in the previous week has made the valuations extremely attractive which will induce a fresh bout of buying this week.

The average badla rates on the BSE has remained in the region of 20 per cent thereby indicating that the operators are willing to carry forward their position in the hope that there will be fresh buying by foreign institutions this week.

The badla rates are high mainly because badla financiers have found better avenues to park their funds. Thus, the operators have to give the badla financiers a higher rate of interest to carry forward their position, says Kaushik J Shah, an analyst with Vikram Kenia Share andStock Brokers.

 

Leading brokers said the indices would have further slipped in the absence of domestic institutional buying support as operators were unwinding their long positions in tandem with FII sales. The 30-scrip BSE Sensex closed last week at 3224.36, down 26.85 points over the previous weeks close of 3351.21.

The NSE-50 index ended the week at 963.45, a loss of 23.35 points over the previous weeks close of 986.80.

According to market sources, the first hour of Monday on the BSE should see prices shooting up. The stock prices made smart recovery at the NSE on Friday when the BSE remained closed. Thus, the first hour at the BSE on Monday will be crucial as prices should be going up, said a BSE broker.

It is difficult to take a view on the market as it has now become a trading market. The market has fallen so badly that valuations have become extremely attractive. So, some amount of fresh buying is bound to come in, said Shah.

In the past one month, buying has been more speculative in nature while selling has been actual, pressed on by the FIIs. Thus, the shares sold by the FIIs are yet to be absorbed in the market.

Sustained selling pressure from foreign institutional investors (FIIs) dragged down share prices at the major bourses last week. Equities staged a partial recovery towards the close of the week on buying support from domestic institutions at lower levels.

Among the scrips that braved the falling markets last week included Digital Equipment, HLL and Aptech. The Digital Equipment scrip witnessed frenzied buying on the news of the takeover of the company internationally by Compaq Corporation. The scrip moved up initially but declined later to close at Rs 132 on the BSE, down by Rs 5 over the previous weeks close.

Hindustan Lever was the other scrip that attracted attention from both operators and FIIs as the company is to announce its half-yearly results on February 3. The scrip closed at Rs 1294, down by Rs 40 over the previous weeks close.

Aptech also witnessed hectic trading activity last week on news of the company holding a meeting this week to decide on a bonus issue. The scrip closed last week at Rs 629, up by Rs 25 over the previous weeks close.

According to BSE brokers, the market might stage further recovery next week as domestic institutions are expected to play an active role in the market in view of the declining call money rates.

New Delhi: The bearish phase at the Delhi Stock Exchange entered its third week on persistent selling by profit-takers as well as domestic and foreign funds.

The benchmark DSE sensitive index slipped below the psychological 700-point barrier to close at 696.66 points, down 15.24 points from the previous week's 711.90.

Morgan Stanley, which was reported to have announced its decision to reduce investments in India, sold shares of Hindustan Lever, Castrol and HDFC. (UNI)

This further accelerated the decline, brokers said.

After a long bearish phase, share prices rebounded on Thursday on brisk buying by investors and speculators along with short covering and wiped off initial losses to finish higher.

Marketmen said fresh buying at the lower levels was mainly from investors and speculators. They added that in the wake of the rising trend, bear operators were forced to square off their short position which further fuelled the buying spree.

ACC was the most prominent loser in the specified category crashing by Rs 49.75 to close the week at Rs 1280.25 followed by Bajaj Auto which lost Rs 46 at Rs 494.50.

While ITC shed Rs 33 to close at Rs 558, Hindustan Lever lost Rs 21 at Rs 1294.

The other losers were Apollo Tyres, Asian Hotels, Arvind Mills, Daewoo Motors India Ltd, Escorts, Hindustan Motors, ICICI, ITC Hotels, L&T, LML, Reliance Industries, SBI, Telco and Tisco.

Smithkline Beecham was the major gainer, shooting up by Rs 14.25 to close the week at Rs 350.

The gainers list also included DCM, Hero Honda, Nestle India and Ranbaxy Labs.