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No fireworks in store

Deeptha Rajkumar

THE sagging fortunes of the rupee and the absence of follow-up buying are likely to impact the market adversely in the week ahead.

Brokers and fund managers predict a weak to range-bound market on Monday and believe that the lack of support at higher levels is likely to dampen sentiment.

``The market will largely remain lacklustre. Market indicators on the whole do not augur well for any sharp upward movement in the Sensex,'' Mr. Rasesh Manniar, Chief dealer with Mukesh Babu Securities, said.

The element of uncertainty and the fluctuating sentiment has increased the element of risk for traders exponentially. The not-so-small trader or participants with an edge are also finding the going tough.

Foreign institutional investors (FIIs) have turned whipping boys as the market is trying desperately to pin the blame on someone or something.

However, FII figures (net sell/buy) for August exonerate the FIIs. As per SEBI figures, FIIs have been net buyers to the tune of Rs. 2,175.3 crores in August and account for a net sell position of Rs. 1,507.10 crores to date. Thus, the net inflow for Aug ust till date stands at Rs. 668.20 crores.

It is reasonably clear that while FIIs are avoiding fresh purchases, they have adopted a wait-n-watch attitude as regards the Indian market.

Reiterating this is the head of research of SG Asia Securities, Ms. Sangeeta Purshottam, who believes that the FIIs

are waiting for the rupee to stabilise before commencing fresh purchases.

Yet, even if the rupee continues its slide and play havoc with the market sentiment, one can expect the FIIs to turn net buyers at infotech counters, which stand to gain in terms of increased export income against rupee's failing health.

``The fact of the matter is that at these low valuations, one can expect foreign funds to come in and support tech funds. The fall in the rupee will boost the bottomline of net foreign exchange earners,'' explained Mr. Manniar.

According to Mr. Ketan Jhaveri, Assistant Vice-President and Chief Dealer at Kotak Securities, technically, the rupee is poised for a recovery and should stabilise in the week ahead.

``The Government and the RBI have asked companies to bring back the unused proceeds of their overseas equity issues. Hence, the rupee is bound to recover. Besides at these levels, the market will witness renewed buying interest in tech shares,'' added Mr . Jhaveri.

This could, however, once again lead to a scenario of too much money chasing few stocks. ``We are likely to see the market become dependent on 5-7 stocks. This is bound to happen when investors ignore fundamentals in order to make quick money,'' a dealer with Khandwala Securities said.The BSE Sensex, which witnessed an intra-week high of 4317 from its close of 4186.16 on August 4, ended the week at 4192 levels. With this fall, the Sensex has neutralised its gains week-on-week. If the market were to brea ch the support level of 4186, players believe the market will move into a bear zone.

The weak trend in the US market followed by subdued sentiment in markets such as Japan and Hong Kong has added to the cautious element in the market.

Tuesday being a trading holiday on account of Independence Day, operators will most likely go in for squaring up of positions taken or book profits.

``With Monday being NSE's last day for settlement, the market will witness some amount of selling pressure,'' a dealer said.

According to a leading market player, ``it is very difficult to give a clear call in a market which does not have any positive news to factor in.''