Traders bullish on select IT stocks

Sanjiv Shankaran

THE average badla rate for the market was around 15 per cent, higher by about 0.5 percentage points in relation to the previous week's rate.

The aggregate badla/carry-forward turnover was Rs. 2,468 crores, an increase of Rs. 165 crores in relation to the last badla session's turnover.

The BSE Sensex ended the settlement at 4,477.31 points, higher by about 60 points in relation to the previous settlement's close. On the heels of the renewed investment inflow from foreign institutional investors (FIIs) in August, the market indices have displayed a firm undertone.

In the preceding settlement, however, the equity market witnessed significant selling by FIIs. This development may have a negative impact on outlook of traders. In this backdrop, there was a significant rise in the share price of infotech heavyweights such as Infosys Technologies, Satyam Computers and NIIT. FIIs selling and the possibility of a correction in infotech heavyweights induce a degree of uncertainty in the market.

The badla session indicated that traders are optimistic enough in select infotech stocks to significantly increase their long positions. Among the counters where the aggregate badla position rose sharply were Satyam Computers, Software Solutions, Silverline Technologies, Wipro and Himachal Futuristic Communications.

Zee Telefilms also registered a sharp increase in volume. An interesting development was that Infosys Technologies, which saw a sharp jump on Friday, recorded a decline in badla turnover.

Even though traders appear optimistic, all signals do not suggest a overwhelming yes in favour of frontline technology and media counters. The market is still delicately placed, thereby giving a mixed signal if the badla trading pattern is anything to go by. Investors may exercise caution in technology counters in the coming week.

A few counters where there was a significant increase in badla volume were ITC, HDFC, Hindustan Lever, MTNL, Sterlite, Dabur and Bank of Baroda.

EIH recorded backwardation as also Ranbaxy. EIH has seen a spectacular rally over the last few weeks and the backwardation along with increased volumes suggest that the counter may soon see a trend reversal.