Sunday, Nov 17, 2002
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By Oommen A. Ninan
"The market looks good as time-cycle suggests that market bottoms out during October-November,'' said Jignesh Shah, Strategist, ASK Raymond James Securities. According to him, the market seems to move up till mid-February following the U.S. markets. "This time strength can be observed in front line Sensex stocks. Right now, information technology and two-wheeler automobile stocks look good and stocks of public sector enterprises are likely to weaken,'' Mr. Shah added. Further, he said, the raising of India's weightage in MSCI index and Moody's decision to review India's forex credit rating for a possible upgrade created positive sentiment for equities. However, Nikhil Khatau, Chief Executive Officer of Sun F&C, differs from the argument that bullishness is back on Indian bourses. "On the whole, there is no positive trigger in the short term. On a long term basis, the market now seems to present buying opportunities on the basis of fundamental analysis,'' Mr. Khatau said. According to him among the sectors, the performance of top-line technology companies has been good. The benchmark Bombay Stock Exchange 30-share sensitive index (Sensex) moved up by 77.07 points to 3033.91 during the week ended November 15, from 2956.84 in the previous week. On the National Stock Exchange, the S&P CNX Nifty index moved up by 33.40 points to 990.35 from 956.95. The rally in stocks gathered momentum on the last day of the week by 47.35 points on Moody's decision. Among economy stocks, cement staged a smart recovery. The major gains of Sensex were in the last two days of trading, 73.25 points. In the first three days, trading was lacklustre and remained range-bound. At its quarterly review of global indices, MSCI has raised India's weightage in its MSCI Asia-Pacific ex-Japan index to 3.14 per cent from 3.12 per cent. India's weightage in the MSCI's Emerging Markets Index has also risen to 4.25 per cent from 4.21 per cent. All changes to MSCI's indices will be effective as at close on November 29. Moody's indication on upgradation of India's sovereign rating for foreign currency bonds, debt ceiling and bank deposits was due to a "substantial strengthening of its external financial situation''. This was the stand taken by the Reserve Bank of India in its mid-term review of Monetary and Credit Policy 2002-03 recently; "Despite several unexpected adverse developments on the external and domestic fronts, India's external situation has remained satisfactory,'' the RBI stated. The Moody's ongoing analysis of India was focused on whether the fiscal problems facing the Government could spill over to a balance of payments (BoP) crisis, a linkage that would limit the difference between the foreign and domestic currency rating. The international rating agency would review for possible upgrade of India's present rating of Ba2 for foreign currency ceiling for debt and Ba3 for foreign currency country ceiling for bank deposits. It is expected that the sovereign rating, likely to be assigned for foreign currency denominated bonds in the international markets, will also be reviewed for possible upgrade. However, the Ba2 domestic currency bond rating of the Government was not on review and that the outlook on this rating remained negative.
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