Firm trend in convergence stocks likely

Krishnan Thiagarajan

THE average badla rate for the market crept up to 9.5-10.5 per cent, up from around 8.6 per cent in the previous week.

The aggregate badla/carry-forward turnover was Rs 2,432 crore, up Rs 69 crores vis-a-vis the previous week.

After a lacklustre week in which the BSE Sensex dipped by 0.9 per cent and the broadbased BL-250 Index appreciated by 0.2 per cent, the market sentiment is likely to turn for the better in the coming week.

The week gone by was a turbulent one, in which the BSE Sensex gyrated wildly, down by 121 points on the first day of the settlement, only to recover all its losses the following day. For the past couple of weeks, the outlook for the markets has remained uncertain and it is expected that the new settlement may bring in better tidings.

The pattern of badla trading, as discerned from the net outstanding position and value, seems to suggest that stocks from the `convergence triad' _ software, media and telecom _ may exhibit firm price trends in the coming week.

In software, stocks such as Aptech, Digital Equipment, Infosys Technologies and NIIT may display a firm undertone. In the telecom category, Himachal Futuristic and Sterlite Optical Technologies are poised for an uptrend. In media, the badla trading pattern seems to indicate that Zee Telefilms may also witness a positive trend in the coming week.

A couple of pharmaceutical stocks which show signs of positive sentiment are Dr Reddy's Laboratories, Wockhardt and Ranbaxy Labs. Among other sectors, the stocks which may get a boost are Gujarat Ambuja Cements, Oriental Bank. Punjab Tractors may see a marginal uptrend.

Four stocks which registered backwardation (or ulta badla) this week were Reckitt & Colman, HDFC, Cipla and Britannia Industries. These stocks may experience a phase of flat price movement or a downward correction in the coming week. SSI, which came out of the no-delivery period, may recover some lost ground in the coming week.