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Jayanta Mallick

DESPITE attempts at defying gravity, the stock market could not pull off a breakthrough last week. Neither could the Sensex pierce through its strong resistance level at 3,200 points nor could the Nifty cross its barrier of 1,010-point mark.

According to analysts, the trading on Friday had the making of a rally but did not have enough steam. The IT stocks, aided by selective FII buying, saw a run, which seems to have matured and is poised for a correction. For other sectors, there is hardly any trigger for significant buying.

"This week, the liquidity-strapped market is unlikely to usher in a bull run. On the contrary, a correction is possible after Monday or Tuesday," Mr Mathew Easow of matheweasow.com commented.

Mr Ajit Day of Dayco Securities pointed out that some of the IT stocks were quoted at a discount in the futures market on the weekend. "This could be because of short-selling," Mr Easow observed.

The general agreement among the brokers and analysts is that the market is likely to witness range-bound activity this week with sporadic gains here and there.

Market players also mentioned that after a decent run, the US indices might encounter a correction, providing an added justification for a probable bearishness in the Indian market.

Mr John Band, an independent analyst, felt that the last week's buying by a few of the FIIs was not indicative of a trend. "It's stray buying and the institutions which have indulged in some purchases went to sleep without follow-up''.

According to him, large-scale FII buying is long way off. "Apart from the depressed country outlook over the Indo-Pak stand-off and a negative view about the politico-economic administration, the capital gains tax issue would keep the foreign portfolios off the Indian turf at present," he added.

After last year's scam, tax inspectors had harassed quite a few foreign funds present in the country through the Mauritius route, Mr Band said. "The current lack of interest is partly due to the ambiguity whether all can avail of the Mauritius-India tax treaty or it could be discriminatory," he added. Just because one foreign entity, (which allegedly was involved in market manipulation), many others had been subjected to unfair deals by the authorities, Mr Band affirmed.

For the tech stocks, the Infosys analysts' meet, scheduled this week, could throw up some growth indicators for the market. Last week, the Chairman of Infosys, Mr Narayana Murthy, told this writer that the company would like to stick to the conservative profit estimates of 17-20 per cent.

According to Mr Easow, Infosys is seen as an outperformer in terms of its own projection. The forthcoming meet would be significant as the numbers predicted by Infosys could be considered as a benchmark for the industry as a whole, particularly in view of its fledgling BPO business, set for a take-off in the coming quarters, Mr Easow mentioned.

The mid-cap stocks, according to a section of marketpersons, are nearing a bottom-out. But a rally is unlikely before 3- 4 weeks. The cyclicals are also seen drifting along a plateau.

However, despite negative news over lawsuits, technical analysts predict an upward move in Ranbaxy. Cipla was also poised well, they said.

The selective buying in certain bank stocks was also possible this week, according to market players.

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