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Light at the end of tunnel?

Deeptha Rajkumar

MUMBAI, Nov. 26

THE uncertainty is likely to give way and the market may step into a consolidation phase in the week ahead, gaining direction in the process.

While technicals do not favour a runaway market, brokers are of the view that the coming week could witness some reaction initially, but see an improvement in sentiment thereafter.

Given the volatility on Nasdaq and the trend reversal in the South-East Asian markets, the Indian market at this juncture provides attractive options, feel analysts.

``The market will witness more broadbased buying in the week ahead. In the recent past, there has been a shift in market interest to old-economy stocks. Investors are beginning to feel that old-economy stocks need to be looked at,'' the chief dealer of a leading broking house said.

According to Mr Deepak Jasnani, Vice-President, Research and Strategy, Kazi and Maulik Securities Pvt Ltd, the market has been in a indecisive phase and is trying to find its bearings.

``The market has been range-bound over the past two weeks. It has been hovering between a downside of 3800 and an upside of 4030 points. The shadow of Nasdaq continues to hang heavily over tech stocks, thus, forcing investors to shift interest to core co unters. This could change for the better once the imbroglio over the US elections is resolved,'' he explained.

This shift in focus is likely to see a build up of speculative positions in sectors such as cement, steel, FMCG and pharma.

However, it might not be in a big way and might not result in major gains in terms of index movement, brokers added.

The Sensex has, week-on-week, seen a net gain of around 53 points, at its current close of 3868.34. The upside in the current scenario is the fact that with market interest becoming more broadbased, bargain-hunting has resurfaced.

``In a tough market, discretion is the better part of valour,'' a broker said.

Discounting the sluggish trend last week, market players believe that there is strength in the market or else it would not have sustained at these levels with the Nasdaq losing ground by almost 10 per cent this week.

FIIs have been net sellers the whole of last week with disinvestment amounting to Rs 248.6 crore as on November 23. With this, the aggregate net sales during the first four days of the week totalled Rs 135 crore.

Yet, market players feel there is no cause for concern as traditionally November and December see some amount of outflow followed by profit-booking in January.

``Besides till date, for the month of November, FIIs have been net buyers to the tune of Rs 811 crore,'' a institutional broker said.

While market players are convinced that things could get only get better, there are issues which cannot be discounted.

The likelihood of the Opposition stalling various Bills relating to privatisation and economic reforms in the winter session of Parliament is a cause for concern.

``Disinvestment is a key economic legislation. There is a lack of political will with regard to this issue. This alone could provide a positive trigger to the market in the short term,'' Mr Ramesh Damani, BSE member said.

Then there is also the fact that net outstanding levels on the BSE are currently around Rs 2,700 crore. ``The fact that at lower levels there is no float, no supply, could bring about a reaction,'' feels Mr Sunil Singhania, Director, Advani Share and Sto ck Broking.