Market moves into positive territory

S. Vaidyanathan

THE past week saw the markets moving into positive territory with a rise of around 4 to 5 percentage points in various indices.

There is no particular pattern evident in the trends with the gains spread across various sectors.

The overall trend seems suggest that certain amount of value-buying took place in some of the old-economy stocks, which are considered to be good buys at current levels. This value-buying led to recovery in stocks such as Tata Engineering and Tata Steel.

Driven by news, it was the cement sector which was in the limelight. The spurt in despatches in October infused some positive sentiment into the stock. Stocks belonging to the sector had taken a beating on the back of indifferent earnings announcements.

The recovery in the past week has restored only a small part of the losses in the recent months. By no means can this be regarded as a sustainable uptrend. A lot would hinge on the price trends in the industry, which have held the key to profitability. Price rise driven by higher despatches may not last in the long term.

Other sectors which were in limelight included airconditioners, telecommunications and oil sector. Here too, most of the buying was value-driven and on account of good earnings announcements by some of the players.

Paper industry stocks continued to show firm trends that have been evident in the last few months.

As far as the technology sector is concerned, in keeping with the broad pattern in the recent months, the picture is mixed.

Stocks such as Infosys and HCL Technologies have held firm, while a small recovery appears to be underway in Satyam Computers. The stock of Zee Telefilms continues to remain under pressure though it ended the week on a flat note.

Some of the fast moving consumer goods (FMCG) stocks showed firm trends in the wake of favourable earnings announcements by companies such as Cabdury, Britannia and Nestle. This is in contrast to the rather flat trend reported by Hindustan Lever, whose share price too showed some recovery in the past week and helped shore up the indices.

The broadbased nature of the rally last week may not necessarily mean a sustained rise for sometime to come since FIIs' investment pattern has been showing lot of volatility.

Though FII inflows in the past few days have been in positive territory, this is not a clear pointer. Going by the past experience, the trend could well be reversed. For the near term, much would hinge on the trends in stocks such as Infosys and Hindustan Lever, which have showed a high degree of two-way volatility.