New Delhi, Feb 11: Select oldeconomy shares are expected to rise this coming week on buying driven byexpectations over the federal government Budget at the end of the month,fund managers and leading broker research analysts say."What we are seeing is a typical pre-Budget rally taking root and it ismoving from sector to sector," said Taib Securities chief executive officerGirish Nadkarni.
But a 7.1 per cent fall in the past week on the Nasdaq could dampenenthusiasm for Indian software stocks, and some cement and power companiesmay fall prey to profit-taking after recent sharp gains, analysts said.
The Sensex hit a 19-week high of 4,397.33 on Friday after a 1.035 per centrise on the week and the technical outlook is firm.Finance minister Yashwant Sinha is due to present the 2001-02 Budget to theParliament on February 28. It will contain tax-raising measures to help fundthe cost of the devastating Gujarat earthquake on January 26.
"The momentum will see select stocks going higher, mainly in the pharma andhousehold goods sectors," Mr Nadkarni added.
Mr Nadkarni's top pick for the week is Glaxo Ltd, India's leading drug firmby market share.
Glaxo surged 12.2 percent to Rs 485.95 on Friday following an unsourced newsreport saying the government planned to relax price controls.
Some market experts, though, see the benchmark Sensex index pausing at itscurrent level.
"We will see consolidation in the week ahead and till the Budget, as it islikely to have harsh measures," said Templeton India chief investmentofficer Nilesh Shah.
The government has already announced it will raise the surcharge on bothcorporate and individual income by two percentage points to raise money tofinance the reconstruction of areas badly damaged by last month'searthquake.
Other taxes and levies are expected to be raised as the income tax surchargealone will not be enough to foot the bill, which the government hasestimated at about Rs 208 billion ($4.48 billion). Some private bodies putthe figure substantially higher.
Mr Shah said his top picks for the week would be state-owned refining andtelecom companies.
Mr Nadkarni also fancies stocks of certain state-owned companies, saying"the correct steps for disinvestment are being taken so the downside islimited for these stocks."
Government-owned monopoly provider of overseas telephone services VideshSanchar Nigam Ltd, hardware and software maintenance firm CMC Ltd andShipping Corp Ltd could gain, Mr Nadkarni said.
KR Choksey Securities' research head Jigar Shah said, he expected "acrossthe board" profit-taking in cement companies this week as they have recentlyrisen sharply.
"We could see a weak opening for software stocks on Monday as Friday's threeper cent fall on Nasdaq will be a dampener," said Sunidhi ConsultancyServices director Bimal Parekh. "But the initial fall will be offset by therise in cyclicals in the pre-Budget rally," he added. On Friday, the Nasdaqsank 3.56 percent to 2,470.97 points. .ADRs of Indian software companieswere largely unscathed in the carnage. In fact, ADRs of Infosys TechnologiesLtd ended 1.43 per cent higher and Wipro Ltd was up 0.64 per cent onFriday.
(Reuters)
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
