Most exchanges have their favourite stocks. Reliance and State Bank are Mumbai's hot stocks, while MRF trades heavily in Madras. But, ITC is Calcutta's favourite. And never is this more apparent than when some major development is expected in the company, like the announcement of the annual results. With the company is due to announce its annual figures for 1996-97 on May 20, the stock is beginning to show its characteristic pre-result behaviour. The volumes are high, prices spurt and this is followed by some lull before a major rally sets in.

It is an established fact that sometime before the results, the scrip appreciates. But most non-Calcutta brokers prefer to stay away from the stock around this time as it tends to get cornered by a leading Calcutta broker and his coterie.

Analysts expect the company to show a fall in profits for the year. But, this does not matter to punters. Early in the week, these brokers began to buy heavily into the scrip, volumes increased, though the price has not kept pace with it. It almost seems that irrespective of what the results are, the punters will have their party.

Despite the traditional hype surrounding the company, this time around there are a couple of factors that cloud the sentiment. One, the company's legal problems are far too many. Second, the results are coming at a time when the market sentiment is once again on the wane, thus reducing the time span available for a rally.

Markets fall further

The market sentiment, on the whole, is not included in the bullish outlook for ITC. Brokers' enthusiasm has been ebbing for the last week or so, ever since the political storm blew over. After all the excitement, there is only the oil price hike to look forward to. Corporate results, the kind that Century Textiles announced, have shaken market sentiment severely. For most part, the fall in the Sensex on Tuesday was mainly due to a shaky market reacting to corporate results.

Brokers now feel that results of the remaining pivotals will be bad. ACC and Tisco, in particular, are not expected to do well. This line of thinking will only serve to worsen the already shaky sentiment.

But much of the negative sentiment should be adequately used up by the time the oil price hike, expected before the month-end. After the impact of the hike is assessed, various funds moving to the sidelines in droves may re-enter the market. Till such time, trading volumes will keep falling, and so will prices.

Results spur bank stocks

After the credit policy was announced, bank stocks and subsequently NBFC stocks perked up as people turned bullish on the finance sector. Banks had gained across the board, but now the sentiment is being limited to the companies which have already presented good growth and earnings figures are expected to announce better earnings for 1996-97.

Bank of India (BoI) and Global Trust Bank scrips, both of which declared very good results, were two of the highest gainers. The BoI stock hit the circuit breaker at the BSE and the NSE. An amazing three-and-a-half million shares were traded on the NSE, while Global Trust's volumes tripled to over one lakh shares. Federal Bank, another big gainer, is expected to announce impressive figures for the year. But the stock that surprised the markets with a strong movement was Karur Vysya Bank. Foreign fund managers reportedly accumulated the stock even as rumours of a bonus spread in the market, though no one was really aware of the ratio. The stock traded 55,000 shares on the NSE on Tuesday, an unusually large volume.

The State Bank stock would have almost been sidelined had it not been for the volumes in the stock, as the price moved lower by one rupee. The scrip saw almost Rs 400 crore traded on the NSE alone, with the BSE chipping in with another Rs 187 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.