Mixed fortunes marked the week (May 5-9) on the Madras Stock Exchange (MSE) as the market traced an undulating pattern. The threat of a petro-price hike, the Laloo factor and a spate of poor results kept the sentiment low. There were some good signs in the form of banking companies posting good results and dissipation of foreign institutional investor interest (FII) into mid-cap shares.

The MSE index ended the week at 3,642 points against the previous week's close of 3,698 points in the process losing about 56 points.

The scrips took a tumble on Monday. According to brokers, the move to hike petro prices and the political crisis likely to be triggered off by the Laloo Prasad Yadav controversy and institutional selling were instrumental in the 88-point fall of the MSE index that day.

Even though the sentiment was very much the same on Tuesday, the market managed to sustain Monday's level on short-covering (as it was the last day of the settlement on NSE). The market fell marginally on Wednesday as selling pressure persisted. The MSE index lost about 15 points.

On Thursday, the sentiment turned upbeat. Marketmen attribute this to the emergence of a clearer picture on the passage of the Finance Bill. In fact, the market, according to a broker, was bracing itself for some amount of concessions to the Left demands before the Bill is finally passed. When it became clear that the Finance Minister had not yielded to any of the pressures, the sentiment improved. Reports of Sonia Gandhi joining the Congress also pepped up the market.

With Friday the last day of settlement, the market managed to sustain its level.

The week saw the resurgence of interest in sugar scrips. Although there was not much activity on MSE, many hitherto illiquid scrips in this industry segment were traded. Most sugar scrips made moderate gains. Software scrips flared up when the Finance Minister exempted them from minimum alternate tax (MAT).

Bank scrips shot up as FII interest in them increased. Many FIIs were reported to have picked up banking scrips such as BoB and BoI. This sudden FII interest amidst news of banking companies likely to post good performance resulted in many punters taking huge positions. This was witnessed especially in low priced banking scrips such as Global Trust Bank, Karnataka Bank, Nedungadi Bank, Bank of Madura, etc. The expectation was that FII interest would trickle down to second-line banking scrips once their interest in SBI, BoB and BoI subsides. However, profit-taking halted the bull run in these scrips on Friday.

Marketmen expect the market to move sideways till the spate of bad results stop and petro-price hike threat lingers on.

They, however, expect a rally, at least a minor one, once the Finance Bill is passed. Some forecast a rally in the B-group in the next two months and cite the emergence of institutional interest in these scrips as the symptom.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.