May 5, 2001|
Privatisation holds key
The BSE Sensex gained 92 points to finish the week above 3,500 levels. The NSE Niftyís gains were similar in percentage terms. TMT and bank pivotals were largely responsible for this strong showing. Select pharma and cement companies too contributed to the gains.
FII buying in the Indian markets has crossed Rs 100 bn in the first four months of the year 2001. Infact they were net buyers to the tune of Rs 2.5 bn in the last week. The buying was reported in selective software, banks and pharma stocks. Decision of some of the companies to hike the FII limit to 49% from 40% earlier, spurted the buying interest.
The trio of Infosys, Satyam and Zee together contributed nearly 82 points to the BSE Sensexís gains. SBI and ICICI were the key contributors (19.7 points) among banks and financial institutions. That the FIIs have been allowed to buy around 1.5 m shares in SBI seemed to have prompted the buying in the stock. ICICI rose despite posting a 56% drop in net profit for FY01. This was because the financial institution decided to increase its NPA provisions to clean up the balance sheet. HDFC was the other gainer during the week.
There were rumours that the RBI might go in for another round of interest rate cut. Added to that some key PSU banks and financial institutions are expected to post results in the coming days. This was also one of the reasons for the spurt in buying of select banks and financial institutions.
Among cement Grasim, Gujarat Ambuja and ACC were the key gainers. Good results by these companies in FY01 were one of the primary reasons for interest in these stocks. Added to that the price agreement reached between the key manufacturers continues to benefit realisations of these companies. Grasim had another reason for gaining. The company has acquired UP Cement Corporation (a state owned unit) for a consideration of Rs 2.4 bn.
Buyback season was also in full bloom. Siemens, Alfa Laval, GE Shipping and Castrol, all were in the limelight because of the buyback reasons.
Towards the end telecom PSUs, MTNL and VSNL gained. This was probably because the Balco controversy was showing signs of ending. Based on this the VSNL and MTNL divestment hopes soared. But Balco workers continue to be on strike despite the Supreme Courtís ruling. If this continues then the divestment hopefuls could see a weakness in their valuations. However, if the strike ends the other PSUs could see renewed interest.
Another trigger the markets are looking at is the MET departmentís monsoon forecast this month end. With key Indian states reeling under drought (Gujarat and Rajasthan) and states like Madhya Pradesh and Maharashtra showing signs of difficult situations, the MET departmentís outlook on the monsoons could provide some direction to the bourses.
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