Biggies put stock market back in bull zone

Article from Economictimes.com

The market recouped a major portion of Thursday’s losses, but investors continued to stay away from second-line stocks on Friday. The major indices were bolstered by a strong performance by index heavyweights Reliance Industries and ONGC, which rose 3% and 1%, respectively.

In a volatile session, the 30-share Sensex swung between a high of 20,894.79 and a low of 20,505.81, before settling at 20,827.45, up 245.37 points or 1.2%. Dealers said sentiment weakened after the data for industrial production turned out to be lower than market expectations. However, market players started cutting their short positions as they expect the mood to be positive next week as the mega public issue of Reliance Power opens for subscription.

The 50-share Nifty ended the day at 6200.10 points, up 43.15 points or 0.7%. Overall, the mood in key Asian markets was subdued. Market breadth on the BSE remained weak, with nearly 3 stocks declining for every one that gained.

Dealers said investors are exiting second-line shares where they no longer see fundamentals supporting a further rise in prices. Also, many investors are liquidating existing positions to finance their purchases in the primary market.

“The liquidity is expected to flow from secondary market to the primary market as the Reliance Power IPO would open on Tuesday, apart from other IPO (Future Capital) that is already on,” said Religare Securities president-equities Amitabh Chakraborty. “Today’s (Friday’s) bounceback indicates that the trend is likely to be positive next week,” he added.

IT stocks were under pressure as Infosys Technologies’ third quarter numbers and flat guidance failed to make an impression. Infosys shares ended 1% lower at Rs 1,580, while BSE IT index shed around 1%. Mr Chakraborty expects IT scips to outperform near term as most of them have been oversold.

Market watchers say quarterly earnings of key companies will decide the trend in the short term. HDFC, SBI, ITC and Ranbaxy are some of the frontline companies reporting their numbers next week.

Banking shares were the star performers, as investors expect interest rates to soften, which in turn could boost demand for loans.

ICICI Bank and Axis Bank gained 6% and 7%, respectively. Reflecting the strong demand for banking shares, the BSE Bankex rose close to 4%, touching a record high of 12,550.70 intra-day.