Strong buying needed to pull Sensex up

Sustained FII sales figures continue to weigh on the market sentiment. Higher US interest rates have prompted funds to pull out from emerging markets. The outflow of FIIs by the first few days of May 2005 totaled Rs 624.60 crore (till May 18, 2005).

While FIIs continue to press sales, local funds’ buying continues. Local funds are sitting on a pile of cash, thanks to hefty collections from IPOs of equity mutual funds schemes that they launched in the past few months.

The inflow of local funds in equities has reached Rs 2,551.32 crore (till May 19, 2005). The inflow of local funds has been primarily in small and mid-cap stocks. Quite a few IPOs launched by mutual funds in the past few months have been mid-cap schemes. There’s no indication that FIIs will step up purchases in the coming days. ‘‘The range-bound trading will continue for some more days. The situation will change if the government comes out with any dramatic announcement,’’ said a fund manager.

The market is likely to take direction from Q4 results. Some of the prominent results scheduled are ITC, L&T, SAIL, HPCL, OBC, Bharat Forge, Crompton Greaves and Britannia.