Saturday, August 20, 2005

The Week Ahead - Expiry of August 2005 derivatives contracts may cause volatility


With the Q1 June 2005 results season over, there is absence of any major near term trigger for the bourses.

A correction emerged in the market after the barometer BSE Sensex achieved a record high at above 7,900 in early trade on Thursday (18 August 2005). With oil prices remaining high, the market may correct further.

Given that FII buying has been the driver of the ongoing market rally, FII activity holds the key. FIIs put in Rs 495.90 crore in four trading sessions between 12 August 2005 and 18 August 2005. FIIs had pulled out a net Rs 101.50 crore in two trading sessions on 10 August and 11 August.

Further, there has been a sustained inflow into equities from domestic mutual funds since the past few days and their buying has supported the market. Quite a few mutual funds have launched new equity schemes, and money collected from these schemes is finding its way into equities. The inflow of local funds into equities for August 2005 (by 18 August 2005) totaled Rs 1,384 crore.

Next week marks the expiry of August 2005 derivatives contracts and this may trigger volatility on the bourses in the near term.

The market sentiment remains firm due to strong economic growth and, on prospects of a good crop this year due to recovery of monsoon in July 2005. Data released last Friday (12 August) showed that industrial output rose a robust 11.7% in the year through June, accelerating from a 10.8% rise in May.

source: capital market

The Week Ahead - Expiry of August 2005 derivatives contracts may cause volatility


With the Q1 June 2005 results season over, there is absence of any major near term trigger for the bourses.

A correction emerged in the market after the barometer BSE Sensex achieved a record high at above 7,900 in early trade on Thursday (18 August 2005). With oil prices remaining high, the market may correct further.

Given that FII buying has been the driver of the ongoing market rally, FII activity holds the key. FIIs put in Rs 495.90 crore in four trading sessions between 12 August 2005 and 18 August 2005. FIIs had pulled out a net Rs 101.50 crore in two trading sessions on 10 August and 11 August.

Further, there has been a sustained inflow into equities from domestic mutual funds since the past few days and their buying has supported the market. Quite a few mutual funds have launched new equity schemes, and money collected from these schemes is finding its way into equities. The inflow of local funds into equities for August 2005 (by 18 August 2005) totaled Rs 1,384 crore.

Next week marks the expiry of August 2005 derivatives contracts and this may trigger volatility on the bourses in the near term.

The market sentiment remains firm due to strong economic growth and, on prospects of a good crop this year due to recovery of monsoon in July 2005. Data released last Friday (12 August) showed that industrial output rose a robust 11.7% in the year through June, accelerating from a 10.8% rise in May.

source: capital market



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The Last Week In Market - Correction grips bourses after Sensex hits new high at above 7,900


Profit booking took centrestage after the Sensex hit an all time high at above 7,900 in early trading on Thursday (18 August).

The Sensex was flat on Tuesday (16 August). It spurted 91 points on Wednesday (17 August). The barometer index lost 48 points on Thursday and it shed another 30 points on Friday (19 August 2005). The market remained closed on Monday (15 August 2005) on account of Independence Day.

For the week ended 19 August, the Sensex gained 13.27 points or 0.17% to 7,780.76. The S&P CNX Nifty rose 21.90 points or 0.9% to 2,383.45. A rally in ONGC was largely responsible for the better showing of the Nifty than the Sensex. ONGC's weightage in the Nifty is quite substantial when compared to the scrip's weightage in the Sensex.

The undercurrent was firm due to strong economic growth and, on prospects of a good crops this year, due to recovery of monsoon in July 2005. Data released last Friday (12 August) showed that industrial output rose a robust 11.7% in the year through June, accelerating from a 10.8% rise in May.

FIIs resumed buying. FIIs put in Rs 495.90 crore in four trading sessions between 12 August 2005 and 18 August 2005. FIIs had withdrawn a net Rs 101.50 crore in two trading sessions on 10 August and 11 August.

Local mutual funds continued to mop up equities. Since mid-July 2005, local mutual funds have been sustained buyers on the bourses and their buying has supported the market. Quite a few mutual funds have launched new equity schemes, and money collected from these schemes is finding its way into equities. The inflow of local funds into equities for August 2005 (by 17 August 2005) totaled Rs 1,309 crore.

Cement scrips advanced on renewed buying interest on the back of firm cement prices. Normally, cement prices correct during the monsoon season. But this time round, the prices have proved stronger. The current national average retail prices, at about Rs 155 per 50 kg bag, are 4% higher on an year on year basis and only 2% down from the beginning of June i.e. the beginning of the monsoon season.

Fears of a hike in domestic fuel prices triggered profit taking in auto scrips. But car major Maruti Udyog (MUL) recovered from the lower level following reports that its recently launched Swift model has received strong response.

Tractor & utility vehicles major Mahindra & Mahindra surged after RBI allowed fresh FII buying in the counter and raised FII investment ceiling in the company to 49% from 35%. It may be recalled that M&M's shareholders had approved, at its AGM held on 28 July 2005, an increase in FII investment ceiling to 49% from 35% of the equity capital.

ONGC surged on reports that it has bid to acquire Petrokazakhstan, a Canadian firm with operations in Central Asia.

Construction scrips edged higher on continued buying interest on the back of strong flow of orders and healthy order book positions for most construction firms.

Steel shares strengthened further extending their recently rally on expectations that steel firms would hike prices by up to 7% in September 2005.

Print media shares such as Deccan Chronicle Holdings, Mid-Day Multimedia and Sandesh surged. A renewed buying interest in these stocks materialised on the reckoning that FIIs would mop up shares of print media companies with RBI recently (on 11 August 2005) issuing a notification allowing FII investment in print media firms.

Vivimed Labs made a sparkling debut. The stock settled at Rs 218.35 on the day of its debut on Wednesday – attracting a huge 211.9% premium over the IPO price of Rs 70.

Select auto parts makers, and auto service station Sai Service Station witnessed buying interest on expectations of an increase in demand in the short term due to damage caused to vehicles because of the floods that hit Mumbai late last month. A short-term demand hike is expected in the replacement market for select auto parts such as alternators, starters, clusters, batteries, clutches, brakes, engines, wires and other small parts, according to analysts.

Source : Capital market

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