Rally in value sectors likely

A. Srikanth

THE Indian market never really recovered from the Nasdaq blow. Though the Nasdaq recovered substantially from Monday onwards, the Indian market continued to post losses.

Both the BL - 250 Composite Index and the Sensex posted losses on all the days of the week (Friday was a holiday).

Overall while the BL - 250 lost 186.22 points to end at 1438.31, the Sensex lost a hefty 514.71 points to finish at 4657.42. But just as it has been the case with most other crashes, while the decline is instantaneous, recovery usually comes in fits and starts.

After highly volatile trading on Thursday, the Sensex ended up with a marginal loss of 8.39 points. This could mean the bottom for the long drop in prices over the week. With more corporate results getting released, there is possibility of a revival through next week.

The crash at the Nasdaq was a grim reminder of the problems associated with the Net stocks. But the subsequent recovery is evidence of the confidence reposed by the market in some of the frontline software companies.

The crash has served as a necessary evil to get the market out of its euphoria and force some amount of rational thinking. The episode has paved the way for a process of selectivity in the new economy sectors. A similar trend could get reflected in the Indian market too.

While some amount of rationality could set in for valuations of software stocks, the market could become very selective as far as the second and third-rung software sectors are concerned.

It was also a reminder of the fact that it is madness to totally mimic another market whose contours and composition are entirely different. The disillusionment among the Net stocks got reflected in the entire Indian software sector.

The battered-down valuations of the value sectors could see some revival. The revival which has been witnessed over the last few weeks (which continued during the week too) could get strengthened in the future.

Value sectors got the top representation among the gainers for the week. The major gainers include Reliance Industries (more due to buyback), Thiru Arooran Sugars, Revathi-CP, Kodak India, Pidilite Industries, Bharat Electronics, Nalco Chemicals, Marico Industries, BSES and Engineers India. But given the overall weakness in the market, the extent of gains has been limited.

The defensive growth sectors of pharmaceuticals and FMCG got little representation. The top gainers were limited to Hindustan Lever, Novartis, Glaxo, Cheminor Drugs, Marico Industries and SmithKline Beecham Consumer.

The agrochemical index bucked the trend led by Thiru Arooran Sugars and Marico Industries. Not surprisingly the Sugar industrial index was the biggest gainer during the week.