Markets Prove A Point As FIs Lend Helping Hand

Mumbai, September 25: | Updated: Sep 26 2002, 05:30am hrs
Financial institutions (FIs) and their mutual fund arms seem to have propped up the domestic markets despite adversities.

First it was the fallout of the delay in the disinvestments of the two key oil PSUs Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd, then came the downgrade by Standard & Poors (S&P) and now, the terrorist attack on the temple in Gujarat. And in all these cases, despite the selling by foreign institutional investors, domestic FIs have been successful in keeping the markets stable.

On Wednesday, the domestic markets ended just a tad lower from its previous close recovering smartly from its intra-day low of 2,974 piggybacking on tech and defensive sector stocks, despite fears of a backlash following the militant attack on Gandhinagars Akshardham temple complex.

The Sensitive index (Sensex) of The Stock Exchange, Mumbai (BSE) opened weak at 2,974. It, however, hit an intra-day high at 3,023.65 and finally closed a mere 1.17 points down from its previous close at 3,022.25. The S&P CNX Nifty, however, clocked modest gains to close at 970.05, after having opened weak at 964.65. However, it hit an intra-day high at 971.85.

Vineet Bhatnagar, managing director, Refco Sify opined: The foreign institutional investors have a plethora of choices offered to them. Their sentiment was dented by the deferment of the divestment process of the oil PSUs, as well as the downgrading by S&P. Financial Institutions and domestic funds however have been picking stocks at the lower levels owing to the attractive valuations.

This is proving to be a blessing in these trying times.

Hitesh Sheth, technical analyst at Prabhudas Lilladher, reiterated: Domestic financial institutions as a pattern have made the most of attractive valuations at levels below 3,000, and that has propped up the market. Domestic funds similarly have not been able to resist the temptation of adding to their portfolios in adverse situations in the market, he said.

Post the deferment of the divestment of HPCL and BPCL, FIIs have been net sellers in the equity segment to the tune of Rs 290.50 crore. Comparatively, domestic funds have been net sellers to the tune of just Rs 37.48 crore.

Dealers said that investors dumped stocks in early trades on Wednesday, as a knee-jerk reaction to the militant attack on the temple complex in Gujarat, as the incident had the potential of leading to further trouble.

The undertone of the market was also cautious in the early hours, due to weakness in the US markets.

Dealers, however, added that following the volatility in the tech sector, operators made the most of the attractive valuations in the tech pivotals that led to bargain hunting at lower levels.

Frontline tech counters Satyam Computers (up 2.46 per cent to Rs 216.75), HCL Tech (up 2.1 per cent at Rs 208.75) and Infosys Technologies (up 1.78 per cent to Rs 3,467.65) emerged winners among the Sensex stocks on Wednesday.

Non-Sensex frontline tech stocks Wipro (3.41 per cent to Rs 1,333.90), NIIT (up 2.63 per cent to Rs 132.90) and Digital Global Soft (up 2.45 per cent to Rs 571.85) too helped the markets recover at the days close.