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Journalism of Courage
MUMBAI, Aug 4: Bulls seem to have returned to the stock markets with a bang, pushing up share values and indices on stock exchanges all over the country. The fancied Sensex on Monday jumped to the 52-week high of 4478.19 amidst boom-like conditions.
In fact, the NSE-50 index at the National Stock Exchange touched a new high of 1254.50, showing a net gain of 18 points. The BSE Sensex opened at 4392.47 and touched a high of 4478.19 but declined to close at 4465.37, with a net gain of 118.05 over the previous close of 4347.32. Other exchanges in Delhi and Calcutta also showed similar gains. Now that the Sensex has broken the 4,450-level, there is expectation that it would rise further.
Market circles said factors like lower badla charges in the previous settlement on the BSE, no-delivery period in several shares, good monsoon, good performance by several companies in the first quarter of the current year and political stability contributed to the bull run. “Political uncertainty was the reason for the recent subdued performance by bourses.
The market has taken note of Congress President’s statement that the present government would continue for another 14 months,” said an FII source.
“Much of the momentum for the rally came from local operators bidding for shares in anticipation of foreign fund demand. But still there is not much follow-up foreign fund buying. It’s concentrated only in select stocks,” said a dealer at a foreign brokerage, adding, “We expect a correction before the market rallies further.” There is a lot of speculative bidding taking place, according to Kamal Kabra, former BSE president.
A sharp rise in stocks – 14 companies have already announced book closure – which entered the no-delivery period from Monday also contributed to the surge in index surge. The action was taking place in smaller capitalised stocks which showed volatile movement on account of the no-delivery period. The list included Colgate, Steel Authority of India (SAIL), Gujarat Ambuja Cement, Castrol India Ltd, Procter & Gamble, BPL Ltd and Atlas Copco.
A no-delivery period occurs when a company closes its books and market players can buy or sell the company’s stock without taking delivery of the shares for almost a month. “Players get a longer time to close business during the period as against the usual weekly settlement,” said a broker.
“Despite rumours that the rally was led by local punters, the fact that cash group stocks have also been moving up considerably brings to light that retail investors are evincing buying interest,” said a broker.
According to market sources, the rally was led by both the heavy buying by both local and institutional players. Marketmen point out that this rally has a wider breadth with most players concentrating on mid-cap stocks.
Brokers said investor confidence had improved after many companies forecast a revival in business activity in the second half of 1997/98 (April-March). L&T and TISCO posted good results in the first quarter ended June.
