Uptrend is expected from this Week

FII selling pressure, Weakening of Rupee and huge long positions at the bourses, had their cumulative impact on the trend during the last week. The infotech pivotals were sqaurely affected .The traders curtailed their exposures. Inspite of impressive results from Satyam, Infosys, Pentamedia Graphics, BFL, Aptech, Reliance and Tisco, the scrips witness huge decline in their prices.

If The Indian Stocks markets witsnessed high level of volatility during the last week. The political uncertainties due to probable arrest of Shivsena Supremo Bal thakre created fear psychosis in the minds of investors as well as fund managers. The sensex ultimately shoot on the news of dismissal of the said case. Yet on Wednesday, the sensex took beating. Now the trend is expected to improve in the next week.The FII have booked profits and now the y are expected to enter the market ast the current low valuations.

We once again suggest to pickup Satyam, State Bank, Sterlite, M&M, ITC, Pentamedia Graphics, Global tele, DSQ software,Sonata, and Larsen among the big league scrips. First of all let us review, last week`s trends.

On Monday 24th July: Equities dived as foreign funds sold across the board in their overall shift in allocations to emerging markets, dealers said. The selling pressure forced short-term players to unwind long positions and prompted short-sales which aggravated the fall, dealers said. The Bombay Stock Exchange (BSE) Sensex provisionally ended at 4188.34 points, down 275.32 points from its Friday's close.

The National Stock Exchange's (NSE) S&P CNX Nifty provisionally ended at 1317.75 points, down 70.50 points from its Friday's close. "There is a clear shift in allocation of funds by foreign funds as other Asian markets such as Korea and Thailand have turned attractive," an analyst said. "Foreign funds have been net sellers for more than a month and we did not see much fall as short-term players were carrying forward positions," he added. With no sign of fresh money coming in, the market is now feeling the pinch, a analysts said. The eight straight session fall was compounded with the crashes in the values of other fundamentally sound shares such as Hindustan Lever, Mahanagar Telephone Nigam, Infosys Technologies, Mahindra and Mahindra and Novartis, dealers said. "The foreign funds have been focused on India for quite some and now they seem to be shifting to test the other markets including China", an analysts said. "Nothing has changed fundamentally, but technically it looks bad, we may see some dull days ahead," he added. Though at one stage it looked like that market was set to rebound, selling by short-term players and short sales in shares such as Zee Telefilms, Satyam Computer Services and Himachal Futuristic Communications took the index back. "The major worry is that Sensex has closed at its lowest during the day,' an analyst said.

"Ideally, the fall should have been arrested at 4200 levels. Now that it has breached that, the sensex may however, between 3900 and 4200," he added. While foreign funds are essential to reverse the market trend, it mainly depends on how they perform in other markets such as Thailans, China and Taiwan. "Though the Chinese market may initially look easier to play, the continuation may be dificult with the data from the country always under doubt," An analyst said. While shares have lost values across the board with just the magnitude of fall differentiating them, Nestle, Hero Honda, SmithKline Beecham Consumer, Clariant being the exceptions with gains, dealers said.

Among the major losers were, Infosys Technologies, BFL Software, Rolta India, Wipro, Loser Baer, HCL Technologies and Aptech, ahead of its American Depository Receipts issue pricing. Being the last day of settlement cycle on the NSE, there may not be much scope for reversal in trend, dealers said. Of the 30 sensex stocks, 29 ended below their Friday closes, while one ended higher. Of the 50 Nifty stocks, 46 ended lower and three ended higher, while one ended unchanged. Zee Telefilms was highest traded with more than 10.76 million shares changing hands on BSE and NSE. The share closed 9.28 per cent lower at Rs 417.35.

On Tuesday 25th July: Shares surged, after falling for eight straight days, as political worries receded, as the case against Shiv Sena leader Bal Thackeray was dropped. Bargain buying by domestic institutions and funds also lifted the market, dealers said. The Bombay Stock Exchange (BSE) sensex provisionally closed at 4336.20, up 147.86 points or 3.53 per cent from last day, and up 283.59 points from the day's low of 4052.61 points. The market ended higher bringing waves of relief to the market and raising hopes that shares had hit rock bottom and were not likely to fall further.

Helping lift sentiment was strong buying, initially from local institutions and later from domestic funds as well. Foreign funds, which had been persistently selling in recent sessions and diverting investments to other markets, were also seen buying. Up to Friday, so far this month, foreign funds net equity sales equalled $316.2 million. Dealers said foreign funds were looing for more attractive options as Indian shares were still expensive. "Lets wait and see whether the market sustain its recovery. We have to watch for funds to continue buying. It is too early to give any kind of call on the market," an analyst added. Rises were seen across the board.

Among index components, gains were the sharpest in Satyam Computer Services, which closed 8.25 per cent higher, Gujarat Ambuja Cements, Bharat Heavy Electricals, L&T, which closed nearly 8 per cent higher. Technology stocks, among the worst hit in recent sessions, bounced back smartly. Several second liners, including Orient Information Technology, Rolta India, Wipro, SSI, HCL Infosystems, among others ended 10-16 per cent higher. Diversified industrial major L&T closed 7.82 per cent higher on reports that the companyis likely to hold a 51 per cent stake in its cement division whichit plans to spin off into a separate company. Zee Tele, which is finding favour with funds once again, was the highest traded, with nearly 25 million shares changing hands on the BSE and NSE. Reliance Industries was the next highest traded with over 12 million shares changing hands on the BSE and NSE. The share closed 3.63 per cent higher at Rs 336.90.

On Wednesday 26th July: Stocks closed sharply lower today as short-term players pared long positions in the absence of buying shpport from funds. Dealers said sentiment was cautious because of the recent volatility and investors preferred to take profits after last day's sharp rise. The Bombay Stock Exchange (BSE) Sensex closed at 4191.27, down 144.93 points, or 3.34 per cent, from its previous close. "There is no follow-through buying coming in from funds," an analyst said. "Good buying was expected after yeasterday's recovery. But that has not happned and traders are paring their longs," he added. Dealers had expected the buying to continue as the market was seen to be hitting low levels.

Such hopes, however, were belied as funds, instead, largely kept to the sidelines. Funds managers said the mood in the market was very cautious. Funds were unwilling to take a call on the market after volatility that prevailed in the recent weeks. Most foreign funds were sellers as they were adequately exposed to India. Some were reducing their weighting to India to buy more of some other emerging markets such as South Korea, China and Taiwan. This had contributed to volatility in the market. Investors were not willing to factor in longer-term earnings into current share prices. Falls were seen across sectors but were prominement in technology sector stock.

Zee Telefilms was the next highest traded with nearly 15 million shares changing hands on he BSE and NSE. THe share closed 6.55 per cent lower on the BSE at Rs 412.40. Himachal Futuristic Communications was close behind with over 13 million shares changing hands on the BSE and NSE. The share closed 2.65 per cent lower at Rs 1182.65 on the BSE.

On Thursday 27th July: Shares rebounded, erasing sharp intra-day lows, as short-covering and buying support from mutual funds lent much-needed support to the market. Institutional buying triggered hopes that falls would be stemmed at the current levels, dealers said. The Bombay Stock Exchange (BSE) Sensex closed at 4281.13, up 89.86 poits or 2.14 per cent from its last close, and up 167.71 points from the intra day;s low of 4113.42. THe National Stock Exchange (NSE) S&P CNX Nifty provisionally closed at 1338.05, up 19.80 points or 1.50 per cent from its last close or up 46.75 points from the intraday's low of 1291.30.

Strong buying in some technology and non-technology blue chips helped lift the market up from the day's lows. But what was more encouraging was that institutions, including the UTI were also seen buying, lending much needed support to the market. Institutional players continued to focus on non-technology stocks. These stocks have held ground in recent weeks despite falls all around in the market. Notable gainers included Reliance Industries and Mahindra and Mahindra. Dealers said non-technology counters were being prefered because most technology counters were looking a little over priced.

Foreign funds, however, were not seen buying in a big way. These funds have been net sellers in recent weeks. Market players, however, took heart from the institutional buying. "The market has done very well," an analyst said "Its been twice that it (Sensex) has bounced back from the 4100 level. One would think this is the critical technical support level. I don't see the Sensex losing steam from these levels", he added. Of the 30 sensex stocks, 18 ended above their last close and 12 ended lower. Of the 50 Nifty stocks, 30 ended higher and 20 ended lower. M&M closed 12.78 per cent higher at Rs 183.20. Glaxo India was up 6.30 per cent at Rs 436.80 after company announced a sharp 56.7 per cent rise in its net profit. Telco closed 3.19 per cent higher at Rs 106.85. Technology blue chips which were lower for most of the day, recovered in late trade.

Infosys Technologies, Zee Telefilms and Satyam Computer all ended higher after registering sharp early lows. Zee Telefilms was the next highest traded with over 25 million shares changing hands on the BSE and NSE. The share closed 9.92 per cent lower on the BSE at Rs 453.30. Reliance Industries closed 7.20 per cent higher on the BSE on talk that hte company's promoters were buying the stock. Close behind was close behind with over 15 million shares changing hands on the BSE and NSE. The stock closed 16 per cent higher on the BSE proped up by buying by stock-brokers in Calcuttal to square short positons.

On Friday 28th July: The markets after making gains earlier in the day, clumped to remain at almost constant levels later in the day. The BSE sensex closed the day lower at 4276.70, down marginally by 4.43 points. The NSE S&P CNX Nifty was also down by 4.25 points, closing the day at 1333.80 points. Marketmen were of the opinion that the markets were totally listless in absence of major buying, though financial institutional investors (FIIs) were making minor purchase. The purchase were, however, not as big as that ofwhich are around Rs 2020.7 crore. SBI on the back of good quarter results was up by Rs 5.45 (2.77 per cent) to close at Rs 202.50. On the other hand, Zee Tele was stable at Rs 448.85, down by a marginal Rs 4.45. RIL was down by Rs 7.55 at Rs 340.80, despite major purchase by FIIs and institutions. Infosys made a smart gain of Rs 172.15 and closed at Rs 6954.05. The market saw a lot of two-way trade as investors bought shares on price falls and sold then when the price rose. Institutions and funds extended their buying support, which prevented sensex from fallling significantly below its previous close. But at higher levels, foreign funds continued to sell for profit, dealers said. According to dealers, institutional buying support emerged every time sensex dipped to 4100, or below, indicating there was resistance to further falls.

In spite of sharp volatility, now the retail investment is expected to improve in the next few week. Hence short sale should be avoided:

R.N.Shah & Paresh Gordhandas