Business Daily from THE HINDU group of publications
Monday, Mar 16, 2009
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Business Daily from THE HINDU group of publications Monday, Mar 16, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Stock Markets Markets - Stock Markets Columns - A Ringside View
Dalal Street was relieved to see that the 7,700-point support level on the benchmark index was not breached last week. Wall Street signals and overseas investors’ net positive investment figure on Friday saw a return of optimism in the short term. This week, the local equity market is likely to open on a firm note, but further movements down the week would depend largely on global market cues. Markets are focused on how Governments increase their spending to boost demand and bring about changes in the financial market regulations. Before the forthcoming elections and corporate results here engage the attention of the local market players, global market outlook is likely to be mirrored in the Dalal Street movements. There is sense of uneasiness on the Street over what could be the election outcome and the profitability of the corporates. But the smell of opportunity runs parallel too as the market consolidates at a historically cheaper level. For strategists, as always, it is not the timing alone but an efficient measurement of profitability that is the key to investment or divestment decisions. Active due diligence According to market intelligence, never before have institutional investors, their fund managers and advisors embarked on a due diligence exercise as now. Many of the Sensex or Nifty stocks, which have witnessed selling by the institutional investors, may only see discreet buying depending on the rigorous valuation assessments in the short term. Broking houses have generally opted for safe and defensive recommendations for retail clients. Proprietary trading figures have also come down to a miniscule proportion. Substantially, shrunk investment horizon of long-term institutional investors is another factor that is limiting investment decisions. Short-term playMany funds, local and overseas, have lost money in the past year and have been forced to look for risk-adjusted returns within a one or two-year timeframe instead of a longer timeline of say five years. These investors, despite seeing theoretical opportunity in the current valuations in a wide range of equities, are hesitant to invest simply because future cash flow growth of some of the top Indian companies may turn positive or attractive only after a period. The signals from the corporate numbers for a firm upward turn in the business cycle will induce investor to grab an investment opportunity. They seem to be willing to catch the bus a little late and a trifle higher on the valuation scale, but may not like to be found trapped at lower levels. (Responses may be sent to jayanta_mallick@thehindu.co.in) Index Outlook Sensex makes highest one-day gain in 3 months More Stories on : Stock Markets | Stock Markets | A Ringside View
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