Lyons Range witnesses sustained buying in technology stocks

By A Special Correspondent

KOLKATA, JULY 15. The Calcutta Stock Exchange witnessed a complete reversal of the recent bearish trend last week, although initially the easing trend lingered on due to fresh selling in pivotals. The change for better emerged in the second half of Monday's session when select key counters attracted sustained buying apparently induced by the prevailing low levels and also optimistic expectations in regard to the quarter one performance by technology companies.

The upward thrust in values gained momentum in the subsequent days as in the wake of active buying in IT shares by foreign institutional investors there was a scramble on the part of bears to cover their positions. This in turn accelerated the pace of advance in prices.

Fresh buying, according to market operators, was not only in evidence in technology counters but also in some of the top ranking old economy scrips - all posting perceptible gains as the week wound up, despite profit booking at higher rates which pruned the gains. The business volume also recorded a sharp rise though interest was not widespread. The uptrend in the market was primarily fuelled by impressive first quarter results released by Infosys and Satyam Computer along with select others which set off renewed buying in these counters enabling them to record substantial gains.

Mirroring the uptrend in key counters with substantial weightage in the indices, the prime indicators also surged with BSE's sensex marked up to a high of 3513.75 points from 3308.59 points and closed at 3453.99 points. The CSE's 40-share index shot up to close at 1811.27 points from 1741.41 points during the same period.

The main contributors to the upsurge in the indices were the technology counters, shares of fast moving consumer goods producers, pharma and cement. At present the uptrend is more of a bear rally and it is to be seen whether the market will eventually enter the bullish orbit, a senior CSE member said.

If the buying tempo witnessed during the week in front ranking shares spreads to others, then the hope for bullish trend will be a reality, he added.

Mr. Ajit Day, a former president of the CSE, however, said that the week's rally was more of a technical correction because share prices over the past one month or so have recorded heavy losses. Whether the trend will persist is to be seen in the coming days especially in the context of the disquieting situation on the economic front with industrial production remaining rather disappointing.

Even so, the brisk buying on behalf of FIIs has certainly served to provide a boost to the moral of the market and also the investors putting behind the memory of the recent debacle in the market brought about by the UTI's dismal performance in respect of its flagship scheme - U.S. 64.

The star performers of the week included Hindustan Lever which firmed up to a high of Rs. 224 from Rs. 197.70 before finishing at Rs. 222.50, Satyam Computer rose to Rs. 198.10 from Rs. 157.30 but settled at Rs. 184.30 and Ranbaxy hit a high of Rs.350.40 before winding up at Rs. 335 against previous Rs. 469.30. Infosys also recorded spectacular gains because of the excellent performance in the first quarter touching a top of Rs. 3955. ACC, Global Telesystem, Himachal Futuristic, Grasim, ITC and select others also closed the week in the positive area but Reliance Industries surrendered part of the gains to be pegged at Rs. 335 against previous Rs. 325.60 and the week's highest of Rs. 350.40.

Volume on the bourses in general improved sharply as FIIs were buyers. In contrast, however, the domestic institutions were mostly sellers. The sentiment of the market was additional helped by the spurt in Wall Street in the later half of the week on reports from tech. giant Microsoft that its results may exceed the first quarter projections.

This coupled with better than expected performance from Yahoo and Motorala lifted the Nasdaq composite index. This is expected to have its impact on the market sentiment here. Indication of softer interest rates by RBI and softening trend in crude prices owing to continued supplies from Iraq are also a helpful turn aiding revival of interest in old economy shares.

Some of the bank shares evoked interest and looked up based on improved prospects for them. They are reported to have identified agricultural finance as a thrust area and are now thinking in terms of long term relationship with farmers by extending a whole gamut of services to them including kisan credit cards and composite cash credit limits.

Reports said that additional disbursements of around Rs. 2000 crores were made in the current fiscal against Rs.1200 crore in the previous year. The expectation is a 25 per cent growth from this area annually.

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