Widespread gains, barring tech stocks

S. Vaidya Nathan

THE past week has been a fairly good one for the markets. The narrow market indices, such as S & P CNX Nifty and BSE Sensitive Index, have posted gains of around 4 per cent.

The broader-based indices, such as the Business Line 250, have also followed up indicating widespread gains across quite a few stocks and sectors. This is a break from the past three weeks when the markets were on flat terrain. The markets have posted good gains in November 2000 despite the NASDAQ having a poor week and its worst month since 1987.

To some extent, the gains may be linked to enhanced FII interest. FII flows for November have been placed by SEBI at $195.3 million with purchases of Rs 4,791.1 crore and sales of Rs 3,885.7 crore. The domestic mutual funds were however net sellers to the tune of Rs 431.49 crore. This is highest level of selling by these funds over the past six months.

In the past week, much of the gains were from some of the old economy stocks. In the technology sector, while telecom stocks have fared well, stocks of IT companies have been flat. The one exception has been that of Wipro which has notched up impressive gains in this period. The stock has been the major driven as far as the technology sector is concerned. The likes of Infosys Technologies and Satyam Computers have had a flat week.

The buying interest in the cement sector continued for the third week in a row. Stocks such as ACC and Madras Cements have posted good gains while the widely favoured stock, Gujarat Ambuja Cements, has shown firm trends at around the Rs 160-mark.

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The ACC stock is up close to 45 per cent in the last one month or so. Though some price increases have been effected by cement producers, the recent gains in the stocks may be more due to the steep correction earlier than any significant change in the fundamental outlook for the industry.

Value-buying continues to drive the stocks of BHEL and Asea Brown Boveri. As a consequence, the BL Electrical & Power Equipment Index has managed gains of around 11 per cent. These two stocks are widely held by institutional investors. Firm trends in these stocks may continue though the sustainability of much of these gains may become clearer only when the fourth quarter earnings announcements are out.

The stocks of consumer products' companies have been on a firm wicket. Personal products has seen some restoration of value shed in recent months in stocks such as Hindustan Lever and Colgate Palmolive. With the gains in the past two weeks, the Hindustan Lever stock appears to have, at least, temporarily regained much of the losses suffered in the wake of flat top-line growth announcement for the July-September quarter.

Telecom sector stocks continue to attract buying interest with stocks such as MTNL and Himachal Futuristic showing gains and VSNL holding firm ground. The sector gained around 11 per cent.

Overall, it has been a fairly good week for the markets. But in keeping with the trends in recent months, a phase of consolidation may lie ahead in the next week or so before concrete signs about the sustainability of the uptrend becomes clear. If the NASDAQ recovers, then the IT sector may show some gains. A lot would also hinge on how FIIs go in December after showing interest in November.