Participants Chart Cautious Path

There is a reversal in trend but the magnitude is not sufficient enough to inspire confidence. A wait-and-watch strategy is prevalent among participants.

In short, the market is dominated by fence sitters.

At the broad economic level, there are concerns that money may be sucked out of the system in an effort to keep inflation low and achieve a desired exchange rate.

The US Fed chief continues to give signals of a further rate hike.

All these factors coupled with the hard reality at the domestic front indicate that the suspense and trauma will continue for some more time.

The view on the street is, tread with caution and pick stocks on a bottom-up basis rather than on a momentum play.

 

The true picture

In the absence of a clarification from the company , the true picture at the Satyam Computer counter is yet to be revealed.

What the latest round of events with respect to Zee Telefilms and Satyam have helped to highlight is the high price that corporates may have to pay for lack of transparency.

In fact, this in itself is a welcome development as it would force promoters to be above board as sooner or later it is their notional wealth which is going to take a hit.

What is believed to have been conveyed to fund managers was that the contribution made to Satyam's bottomline by the merger of Satyam Enterprises is in excess of the consideration thought to have been paid.

However, before the clarification could reach their ears, Prudent and Uncle Sam pressed the sell button.Between these two funds, 1,00,000 shares of Satyam were sold.

A value pick

The Mastek scrip is being strongly recommended because its business volumes are expected grow at better than industry rates. Moreover, the technology profile of Mastek with 40 per cent of its business coming from cutomer relationship management has a lot of innate potential.Taking these factors into account, Pearl Brokerage has recommended a buy for the scrip.

The Digital viewpoint

While Savvy continues to maintain an aggressive posture on the Digital counter, Pearl Brokerage thinks otherwise.

It is of the opinion that the transition from a hardware -cum- software company to a software-only company would continue for the better part of this financial year.

Hence, the financial performance would continue to be subdued and it is still not cheap at 74 times projected earnings for financial year 2001.

Pearl believes that the ongoing correction in the market has led to the availability of proven stories at attractive valuations and hence Digital is unattractive on the basis of relative valuations too.

Considering all these factors the broking outfit has recommended a sell.

Old Economy in focus

With the picture continuing to be hazy , funds continue to play safe. As a result, the latest round of buying is being restricted to relatively less volatile counters.

Hindustan Lever (HLL), which is considered one of the safest counters, caught the eye of one of the prominent clients of Paris Brokerage.

Among the orders executed by the broking outfit yesterday was a buy of 40,000 shares of HLL. Jordan Broking also executed a buy order of 30,000 shares. The other cyclical counters to register gains yesterday on the back of fund-based buying was Gujarat Ambuja and Grasim. Thanks mainly to Uncle Sam, ITC has also shown some smart gains due to Mr Big's buy order of 1,00,000 shares.