MUMBAI, JANUARY 7: Five trading sessions into the new year and we have amarket split vertically into two, across the board. It's IT vs non-IT. AllIT stocks are clearly on the losing side and the winners are a combinationof economy sensitive stocks led by Reliance Industries and State Bank ofIndia. The division has helped hold the centre with the Sensex hoveringaround 5400.On Friday, the BSE Sensex opened at 5358.28 points and dipped to a low of5330.58 points, before closing at 5414.48 points, with a net loss of 7.05points.
The churning policy appears to be cut out very clearly--exit IT, enternon-IT. Thus, one share of Infosys sold at say an average price of Rs15,000, can fetch 50 shares of Reliance. In other words, selling a fractionof IT stock is enough to diversify the portfolio with a few non-IT stocks.
This is a trend witnessed the world over and India is no exception. Theback-to-basics approach triggered by Nasdaq early this week spread to therest of Asia and in India's case it culminated in the IT leader Infosysending the week with a loss of 22 per cent from its peak of Rs 16,910 onJanuary 4. Wipro too buckled under the pressure losing over 10 per cent andDigital Equipments which had bucked the trend till recently gave in on thelast day of trading during the week.
Look at the other side of the wall, you have Reliance Industries with a gainof 24 per cent from Monday. At 313.50 on Friday, brokers continued to giveit a positive cheer. ``Good results and the listing of its ADRs on NYSEshould take it to higher levels,'' says a broker.
We then have a bit of aluminium play. The sheen on Hindalco is back, whichhas gained over 25 per cent since Monday to close at Rs 1,090. ITC, the oldtime favourite of punters and institutions, has clocked a gain of 18 percent closing at Rs 851. ``The Rs 1,000-mark is not a far cry,'' says abroker.
State Bank of India is on the move too, strengthening the economy story inthe markets. It scored 15 per cent since Monday to end the week at Rs278.90. The division also throws up an interesting feature: stability to theportfolios of investors and especially institutions and mutual funds, whohave been riding the one-leg horse so far.
The new year began with euphoric buying in anticipation of FIIs pouring inmoney. But the Nasdaq scare has seen FIIs pulling out Rs 568 crore in twodays from the markets. The profit-booking is the obvious result of thebuild-up that was seen during the earlier part of the week.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.