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Jayanta Mallick

THE stock market seems to be bottoming out. This is the impression one gathers from a cross section of market players.

"The market has been preparing the ground for a bull phase for quite some time now. Despite a plethora of negative news in the last couple of months and unabated selling spree by the FIIs, market has shown enormous resilience," feels Mr Mathew Easow, of Mathew Easow Research Securities.

According to analysts and brokers, the sectoral value search and counter-specific value picking have served the market well at a time when the US, European and Asian markets declined.

The market is much more broad-based now, with high net worth investors and day traders having cleared the ground for retail investors to make their entry, observes a senior National Stock Exchange dealer.

"The market was quick to react in filling the void created by FIIs and UTI. It also shed its obsession for tech stocks and took up beaten down old economy stocks, particularly the commodity counters. Coincidentally, some of the commodities are beginning to look up," says Mr Ajay Jaiswal of Lohia Securities.

Mr Easow predicts that the bull phase may start from the second week of July. The first quarter results and profit guidance from the corporates will possibly induce the beginning of a rally.

"This week, however, is likely to see a lateral drift. In absence of very positive triggers, the sentiment is clouded by the development or lack of it at the Breach Candy Hospital," a Bombay Stock Exchange broker opines.

The companies with sound fundamentals such as Reliance or Bajaj Auto, the market persons think, are unlikely to be affected by developments outside the corporate field. "But such happenings do affect market sentiment on the whole as also the respective stocks, albeit temporarily," they admit.

The market players are also likely to observe, if not speculate, the effect of the WorldCom balance sheet crisis on the Indian telecom and tech companies. Market expects this may cause appropriate regulatory reforms for corporates.

"One thing is for sure; the pressure now would be more on the auditors. The accounting standards reforms and improved auditing practices may come about faster," remarks an institutional broker.

Corporate India and the regulators must be taking note of the balance sheet blues in the US that seem to encompass more and more companies. "So far, the market reforms focussed more on the brokers than on corporates," a chartered accountant-turned broker pointed out.

Sectorally, the stocks of tea, steel, paper, cement, auto, tyre, carbon black and caustic soda manufacturers are poised for gains this week.

"The tea auction prices for the second flush (recent crop) are firming up. There is also news of crop failure in certain parts of Kenya, which serves the US and European markets. Tata Tea and HLL's attempts at consolidating their position in the domestic and overseas markets have also added a positive flavour to the Indian cuppa," says a tea industry watcher.

The private bank scrips such as South Indian Bank or Federal Bank are likely to rule stronger. "All these banks are having a relatively low capital base and are susceptible to change of control. One of these banks' management has been attempting to collect proxy forms in its favour from outstation investors before its AGM," a NSE broker points out.

The lurking threat of opposition from a section of investors has put the promoters or the management on guard. These are symptomatic of valuation possibilities triggered by new or existing investors in the banks," a NSE broker points out. The pharma sector stocks, which are news-driven (a la patent application in the US or FDA approval or disapproval), are likely to remain steady.

The momentum sector scrips, however, do not appear to show inclination towards gaining in strength. According to technical analysts, the sector scrips are currently in a bear phase all over the world. However, the stray upward moves by certain individual stocks are possible.

Certain profit-making PSU stocks, which are still undervalued, may also witness movement. The infrastructure sector scrips are likely to come into the limelight this week.

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