Second week of listless trading

S. Vaidya Nathan

THE stock markets are still in a flat territory. This is the second week of listless trading.

The narrow benchmark indices such as the S&P CNX Nifty and the BSE Sensitive Index suffered marginal losses.

The Business Line composite index of 250 stocks has posted a marginal gain of 0.2 per cent, largely on the back of gains in the technology sector.

Following two weeks of flat trading despite positive FII inflows, the market appears to be caught in a narrow band and is in a directionless state. Barring some major development such as a sharp spurt in FII inflows, the trend seems likely to continue since domestic mutual funds have been on selling mode through November.

* The banking sector was in the limelight during the week. And, for a change, it was not the private sector banks that hogged the limelight. It was the turn of the public sector banks to step into the forefront, if only for a week. The gains posted by stocks in this sector was largely linked to the Government's proposal to amend the laws to allow dilution of its stake in public sector banks to 33-1/3 per cent.

This is intended to enable banks to raise more capital. Though lot of other measures have also been announced,

the players might still find it difficult to raise capital. As a consequence, the uptrend in the recent week may prove to be short-lived.

* The media sector continues to be under stress with Zee Telefilms still caught in a bear grip. A scrutiny of the mutual fund portfolios shows that all the funds that matter have been on a selling mode in the stock despite the fact that it is down close to 80 per cent from its high of around Rs 1,550 (reckoned on a post-stock split basis).

* Stocks from the cement industry, after having been at the receiving end till a month ago, have been recouping the losses. But whether the gains are of sustainable nature remains to be seen since the profitability position of the industry continues to be unimpressive.

* Driven by firm trends in the Great Eastern Shipping stock, the BL shipping index has notched up sizeable gains of around 6 per cent. The stock may continue to show firm trends in the wake of the buyback offer proposed by the company. The company plans to buyback at Rs 42 per share.

* Stocks in the oil refining and distribution sector such as Reliance Petroleum, Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) have shown firm trends. HPCL and BPCL appear to be on a recovery mode after the battering in recent times. Reliance Petroleum has just consolidated in the Rs 50-60 range, where it has tended to trade in the past few months.