FII fund-flows trigger rally

Krishnan Thiagarajan

A RALLY in the technology sector in the latter part of the week led to the broad-based and composite BL -250 Index appreciating by 4.4 per cent to close at 1275.58 points.

Clearly, the strong and positive FII fund-flows triggered a rally in the indices over the week. There was a clear divergence in the stockmarket rally, with old-economy counters surging in the early part and a broad-based rally in technology stocks in the latter half of the week. The surge in the Nasdaq and a positive statement by the US Secretary of State-Designate that the remaining sanctions imposed in India may be removed lent the necessary spark to the stockmarket indices across the board.

This divergent trend has also been confirmed by the major gainers among sectoral indices. Among the sectoral indices, the biggest gainer during the week was Technology Index which appreciated by 10.8 per cent. The other major gainers were the Commodity Index which appreciated by 3.9 per cent, Capital Goods - 3.4 per cent and Core Sector - 2.8 per cent. Among the key losers were Consumer Confidence Index - 0.6 per cent and Banks & FI's - 0.1 per cent.

Among the industrial indices, the major gainers were Steel-Products - 22.1 per cent, Steel-Flat Products - 17.8 per cent, Computer Software -13.5 per cent and Computer Hardware and Office Equipment -13.0 per cent. The key losers were Engineering - Tools ( 5.8) per cent, Banks & FI's - Housing Finance ( 5.7) per cent, Food & Dairy (3.5) per cent, Chemicals - Inorganic and Speciality ( 3.1) per cent and Engineering - Capital Goods (3.0) per cent.

The stocks from the Jindal group and the software sector were the major gainers during the week. From the O.P. Jindal stable, the two key stocks which appreciated in value were Saw Pipes and Jindal Strips by 47.1 per cent and 31.5 per cent respectively. The expectation of a huge order has been bolstering the Saw Pipes stock for the past three weeks or so. Other stocks from the Jindal group which were in the limelight were Jindal Steel and Jindal Vijayanagar Steel.

The key stocks which spearheaded the rally during the week were from the software sector. As the key earnings performance trickled in over the past two weeks from software companies such as Satyam Computers, Infosys Technologies, HCL Technologies and Digital Equipment, the market appears to have given a clear thumbs up to the strong earnings performance. After the initial bearish view in the early part of this year over the impact of the US tech slowdown on the prospects of Indian software companies, the market players appear to be revising their opinion on examining the strong earnings numbers from frontline companies. Among the software companies in the top 10 gainers among BL -250 constituents were Trigyn Technologies, Infosys Technologies, Digital Equipment (India), Wipro and Hughes Software. The key losers during the week were LMW, KSB Pumps, Greaves, Mastek and Novartis.