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Get ready for rolling

Jun 23, 2001

This week, stock markets globally registered lateral movements. The BSE Sensex, NSE Nifty and NASDAQ all recorded decimal changes. Uncertainty still rules clouding out any clear view on the direction of the markets. The domestic markets must be gearing up for the new trading settlement system, which comes into effect from July 2, 2001. Consequently, all outstanding positions taken on or after May 15 will need to be squared off by the end of the coming week. Positions built before May 15 can be held on till September 2 of the current fiscal. In the week ended, net outstanding positions on the BSE reduced considerably from Rs 6 bn to Rs 3.2 bn. This indicates sales of Rs 2.8 bn during the week.

Only a week left...
Company Purchases Sales Net Oustanding
ACC 19.9 72.7 (52.7)
Adani Exports 154.8 6.1 148.8
DSQ Software 99.9 21.7 78.2
Digital Equipment 57.6 130.2 (72.6)
Dr. Reddy 4.6 74.9 (70.4)
Finolex cables 113.4 2.3 111.2
Global tele 191.9 27.3 164.6
Grasim 78.3 11.7 66.6
Gujarat Gas 120.7 2.6 118.1
HFCL 190.8 37.4 153.4
HLL 10.7 120.6 (109.9)
IPCL 108.0 2.9 105.1
India Cement 143.7 0.2 143.5
Indian Rayon 100.2 1.3 98.8
L&T 98.8 380.0 (281.2)
Madras Cements 169.7 0.4 169.4
M&M 54.9 4.9 50.0
Mastek 60.3 1.8 58.5
Nirma 111.7 7.5 104.1
PentaMedia 124.2 18.9 105.3
Pfizer 87.0 1.4 85.6
RPL 115.0 44.8 70.3
SSI 121.0 63.1 57.9
Satyam 194.7 315.7 (121.0)
Saw Pipes 66.4 6.0 60.4
Sterlite Optical 193.0 23.0 170.1
TVS Suzuki 63.1 2.9 60.2
Telco 60.0 7.4 52.7
Tata Power 84.8 14.8 70.0
Tata Steel 218.8 47.4 171.3
VSNL 139.4 33.0 106.4
Zee 157.2 70.8 86.4
BSE 5,949.7 2,743.2 3,206.6

Cement companies except for ACC have positive net outstanding positions. The market seems to be hopeful about the prospects of cement companies. The higher price realizations resulting from cartelisation among producers led to these companies reporting strong financial performance in 4QFY01. Markets, it seems, expect the cartel to hold ensuring a healthy industry environment. However, with the onset of monsoons, latest reports indicate that cement prices have dipped in the Western region. The outlook for the southern producers seems to be more bullish, as realizations are higher compared to rest of the country.

Among the TMT stocks DSQ, Global Tele, HFCL, PentaMedia, SSI, Sterlite Optical and Zee still feature on the list of highest net outstanding positions. All these counters are momentum driven with large speculative activity, which is reflected in the net outstanding positions. Public sector companies, IPCL and VSNL, seem to have attracted speculative activity with all the talk of impending disinvestment. Markets, currently expect that the privatisation of these public assets will materialize.

With only a week remaining before the introduction of rolling settlement market activity is expected to remain lukewarm. One will have to wait and see how the market adapts to the new system and consequently the impact on volumes. On Friday, the Dow Jones fell sharply. Earnings warning, which was synonymous with the TMT sector seems to have infected the old economy and that too the most defensive sector. Merck has warned that it will miss second quarter and full year earnings target. With TMT pulverized and old economy showing weakness the mayhem may not yet be over, which does not augur well for the markets.

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