The Hindu Business Line : Trading may begin on optimistic note

Dull business: Stockbrokers are a worried lot nowadays as the volatile movement puts off retail participants from the market. They are advising clients to buy good stocks when volatility depresses prices. –

This week market may open on a positive note on sentimental grounds, and is likely to follow a relatively steady course. After Satyam and Nortel negatives were factored in to a large extent before the end of the last week, key indices returned to their respective ranges. The third quarter results announced so far have more or less been according to the market apprehensions.

According to market intelligence, investors showed signs of getting over the crisis of confidence over the Satyam affair pretty quickly. Overseas investors, including those who have got themselves registered with SEBI in 2008, are slowly increasing their buying. Despite odds, FIIs may turn in a net positive investment figure in the local market in January. Relative attractiveness of the India equities has not been missed. Investment strategies seem to suggest that the short-term valuations would remain depressed and opportunities are to be lapped up.

Risk-taking

Investment advisers note that all the money that is flowing to the stocks or the sectors are not necessarily defensive. In other words, long-term investors with two- to three-year time horizon are showing willingness to take risk. This comparative reduction in risk aversion and revival of interest is likely to keep the local market ticking in the short run. Overseas investors are, however, committing themselves with caution. Top 50 stocks remain in the list of favourites; a sprinkle of mid-cap stocks also forms a part of their tactical moves.

Exit threat

Domestic investors, excluding traders, have also become circumspect to a great degree. But the market insiders also point out that local investors, who have suffered losses in the past few months, are likely to cut losses or exit at the slightest opportunity.

If these were the dominant factors of the representative investment mindset, it would be difficult for the key indices to break the current Sensex range between 9000 and 10,000. Some analysts take the liberty to say that till the general elections’ results are out, this range-bound (slightly broader range than now) movement could be a reality.

Only unforeseen negative developments could temporarily cloud the picture. After having accepted that difficult quarters are ahead, market is essentially at this juncture looking for clues, which will indicate how long is the long term for Dalal Street.

(Responses may be sent to jayanta_mallick@thehindu.co.in)