Selling By Fis Puts A Dampener On Stock Markets

Selling by domestic institutions such as UTI, SBI and Canbank dampened sentiment in the capital market yesterday.

Of late, trading activity has been in stocks with strong fundamentals like ONGC, MTNL, HLL besides banking scrips.

Brokers say that UTI and other mutual funds have been selling in counters like Telco, MTNL, HPCL and BPCL. The positive outlook in fundamentals of ICICI have resulted in the price of the stock gaining more than 10 per cent. Expectations of favourable results in the Asian Hotels stock (with the board meeting on Monday) resulted in the scrip touching the circuit filter yesterday on the BSE. Market players feel that any decisive movement in stock prices would take place only after the announcement of the petroleum price hike.

 

According to FII Morgan Stanleys latest fortnightly report, the market could move up only after the petroleum product hike comes. On the whole, the poor corporate results have not had the adverse effect which might have been expected. It can be concluded that lower earnings for fiscal 1997 have already been factored in, the report adds.

Leading FIIs are of the view that the fund allocations for the country have the potential to improve, but at a steady pace. There are still inherent negative factors which need to be ironed out, including streamlining of regulations/pricing for infrastructure projects.

According to Nikhil N Khattau, chief executive officer, Sun F&C Asset Management Pvt Ltd, the stock markets, over the short term, could face an overhang of bad news through a petro price hike and developments linked to the CRB fiasco. Indian stocks, however, remain undervalued and thus a net gain for the markets could be seen over a six-month period, he said.

K R Bharat, director, CS First Boston said, The market looks toppish from here. The potential for the markets to take off remains, but this potential has yet to be translated into action. There is no point in the markets to react to policy issues (in this case, the report on capital account convertibility).