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Thursday, May 21, 2009

Action Shifts To Non-Frontline Stocks As Bourses Witness Volatility

Small-caps rise 9% as sensex dips 241 points

Mumbai: Non-frontline stocks are showing substantial volatility. Just like on Tuesday when the sensex showed an end-of-the-day gain of just 18 points and nifty a loss of 5 points, on Wednesday the sensex witnessed a relatively muted trading pattern and ended 241 points lower at 14,061 as investors took profit. The day's loss also reversed the three-session winning streak for sensex.
    However, looking beyond sensex one could see a smart 9% rise in BSE's Smallcap Index and a 6% spurt in the Midcap Index. For every three shares traded on the BSE, one hit the upper circuit. And the combined turnover of the two bourses crossed the Rs 1 lakh crore mark for the second consecutive day.
    Such high turnovers were last seen during the height of the last bull market, in late 2007 and early 2008.
    Despite the day's slide in sensex and nifty, investors were richer by about Rs 75,000 crore with BSE's market capitalisation now at Rs 44.8 lakh crore.
    Dealers pointed out that the day's loss in frontline stocks came on the back of strong selling by FIIs, and a mix of buying and selling by domestic institutions. Provisional data released by BSE showed net FII selling at nearly Rs 1,000 crore and a net buying figure of just Rs 5 crore for domestic institutions (DIIs). Bulk deal data showed a number of foreign funds were exiting construction and realty companies.
    On the DII front, market players pointed out as stocks rally, a number of insurance companies are forced to rebalance their debt and equity portfolios. This is because in all other schemes other than the ULIPs, which are purely market driven, insurance companies are mandated to maintain a particular ratio between debt and equity. As equity prices rise, the portfolio ratio gets skewed toward equity. So to revert to the mandated ratio, insurance companies sell stocks, a top broking house official explained.
    In Wednesday's market, the two top sensex gainers were from the Tata group: Tata Motors up 19.1% at Rs 364 and Tata Steel, up 12.8% at Rs 371. And top losers were DLF, down 7.8% at Rs 355 and ICICI Bank, down 6.6% at Rs 709. For Thursday, market players see some more profit taking while leading indices could again go up on Friday, the day the new UPA government takes oath of office. Re surges against $
Mumbai: The rupee surged further by 31 paise to 47.47/48 against the dollar on Wednesday on fairly good sales of the US currency by exporters in the face of sustained capital inflows into equity and despite the downward trend in the equity market. Analysts said the Indian currency may breach the 45 level by the end of 2009 as heavy capital inflows are expected. AGENCIES



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