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Nalini D'Souza
T was Jayalalitha versus Chautala. While Jayalalitha was termed as the bear', Chautala turned out to be the bull and the saviour of the market. The only light at the end of the tunnel, which brokers looked forward to was the support to a minority government, which came from the Lok Dal. Just as the AIADMK was left aghast at the intervention by Lok Dal, bear operators were also caught unawares when stock prices shot through the roof. Ten minutes and the market was beyond one's imagination and control. Market pundits claimed the time between 12.35 to 1.45 pm was the most auspicious for the market. Pundits were once again proved right as the Sensex shot up by over 150 points during the first ten minutes and further gained 75 points during the next 45 minutes. Interestingly, even as the BSE closed for trading at 2 pm on account of the badla session, NSE continued to trade till 4.05 pm. This difference of a little over 2 hours provided yet another opportunity for those who felt left out. However, the market onceagain entered into the trading zone and moved so fast that neither institutional players nor retail investors could jump on to the band wagon. It is a mystery on who contributed to the 6.4 per cent gain on the BSE and a gain of 7.8 per cent, which is termed as historic, on the NSE on Friday.
Technical snag: Another interesting feature of the day was the technical snag which hit the trading system of NSE. Even as the system was stopped at 12.25 pm and problem rectified within 10 minutes, the system was reopened for trading only at 1 pm. The difference of over 35 minutes and the market was already in an imbalanced state, with most of the index based stocks locked at the upper band on the BSE. Brokers hinted at the beauty of the coincidence between NSE's snag and Chautala providing a helping hand to BJP. Like the market, the NSE's system also seems to have gone out of control, said market players. However NSE's release states, ``The event is being fully analysed to prevent any recurrence and the marketwas kept open till 16.05 for an additional 35 minutes to compensate.'' The compensation package indeed looked attractive, although brokers don't seem to be convinced by the way NSE system goes.
According to fundamentalists, the market was poised for a rally given the excellent performance of many of the market favourites. However, the rally was purely on account of short covering and squaring up of end of account considerations. Stocks which continued to make news during the week were Pentafour Software, Satyam Computers, Bhel, ABB, Telco and ACC.
The roller coaster: The market seems to be providing ample opportunities for short term traders and operators who have delivery or are in a position to cough up enough funds for carry forward of positions. Similarly, an analysis of the sensex movement since the beginning of the year shows that on 14 occasions, the 30-share Sensex has fallen by more than 100 points in a day. On 7 occasions, it has recovered and on 7 occasions it has not. However, on the 7occasions that the Sensex recovered it took on an average 12-13 days to do so. The observation has been based on a study conducted by Ambareesh Baliga of Kotak Securities. According to Baliga, several stocks have witnessed an increase in the price fluctuations during the given period, providing ample opportunities for short term profit-taking. Similarly, fluctuations have been observed at the counters of Blue Information, Crompton Greaves, Voltas, Philips and MTNL.Further, in terms of index specific fluctuations during the year 1997-98, the Sensex witnessed 15 peaks. However during the period between 1998-99 the index fluctuation has risen to 20. The average closing index during the period between 1997-98 has been 3,812.04 points while in 1998-99 it has been 3,291.32.
Cyclical stocks and FIIs: Cyclical stocks seems to be once again gaining favour among FII players. According to market sources, Schrodders was rumoured to have picked up a substantial chunk of ACC and Hindalco at the lower levels.Interestingly, the FII buying interest comes in the wake of the move made by our domestic institutions to clean up their portfolio and liquidated their dud holdings. If dud holdings according to domestic FIs is Tisco, Telco, ACC and several petro chemical stocks, they are providing enough liquidity for FIIs, say brokers. The fear gripping the market is that in the wake of the recovery in the economy, our domestic players would have no holding in these stocks which would directly benefit from the economic recovery.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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