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Boost to select cyclicals

Aarati Krishnan

AFTER FMCG and pharma stocks, it was the turn of select cyclicals which posted a modest recovery over the past week of trading. However, the bargain hunting has been restricted to very few stocks, with the recovery tending to lose steam towards the end o f the period. In a few cases, positive announcements from the companies in question have helped to sustain market interest in the concerned stock for a longer period.

Two-wheeler majors - Hero Honda and Bajaj Auto have seen a recovery over the past fortnight of trading.

The Hero Honda stock has notched up net gains of around 23 per cent over a couple of weeks of trading. The stock opened the fortnight at Rs. 820 and climbed to a high of Rs. 1,090.50 during the fortnight before closing somewhat lower.

The recovery in the case of the Bajaj Auto stock has been aided by speculation about a buyback offer from the company. The stock, which opened the fortnight at Rs. 298 levels, notched up a gain of around 22 per cent in the past week. The company has anno unced a board meeting on March 28 to consider a buyback offer. However, lack of specific information about the pricing of the offer has limited the scope for near term price gains.

The stocks of financial institutions such as IDBI and HDFC have attracted renewed interest over the past fortnight of trading. The IDBI stock opened the fortnight at Rs. 44 levels and touched a high of Rs. 69.55 before weakening to Rs. 51 levels by Frida y's close.

The recent interest in the stock has to be viewed in light of the company's plans to foray into software through a new subsidiary. Both HDFC and HDFC Bank have attracted buying in the stock markets after they announced a new foray into e-broking through the Net. The companies have announced a board meet on March 29 to approve the foray into e-broking. The foray is to be routed through a joint venture in which both HDFC and HDFC bank will pick up stakes.

The stock price of HDFC has been boosted in addition, by the company's recent decision to consider raising the ceiling for FII investments in the company, from 30 to 40 per cent. The possibility of Standard Life, the company's partner for insurance foray , hiking its stake through open market purchases, also lends support to the stock price.