Software scrips crash; Filter on low-priced stocks

Software scrips crash; Filter on low-priced stocks
ENS ECONOMIC BUREAU

MUMBAI, JANUARY 6: Information technology stocks which took the benchmark Sensex above the 5,500 level recently are at the receiving end on stock markets. The market fancy for IT stocks is undergoing a major test with many of them facing massive sell-off. Although Sensex gained by 65 points on Thursday, index heavyweight Infosys Technologies Ltd plunged by Rs 1,244.55 to 14,312.85, hitting the lower end of the eight per cent circuit breaker for the second day running. It had gained 34 per cent in the previous five sessions.

NIIT, Pentafour and a host of other frontline software stocks were on the lower circuit on the BSE on Thursday. Leading losers among software shares on Thursday were: Mastek Ltd Rs 407.65 down at Rs 4,688.35, Hughes Software Rs 345.95 at Rs 3,978.75, NIIT Ltd Rs 262.80 at Rs 3,022.55 and SSI Ltd Rs 169 at Rs 1,951. Brokers attributed the fall to another crash in technology stocks on Nasdaq and other Asian markets.

On the other hand, traditional front runners like HLL, ITC, SBI, Telco,Tisco, MTNL and Reliance were on the upper circuit. As a result, the effect of a fall in the index-based tech-stocks were more than compensated by the rise in the commodity and other non-IT stocks in the Sensex, which closed almost 64.53 points up at 5421.53. The Nifty on the NSE also closed 21.80 points higher at 1617.60.

The shift in market focus to the traditional sectors from the fancied software scrips, the huge outstanding positions and profit-booking initiatives by FIIs have now set the stage for a substantial fall in the market on Friday. Additionally, amidst the gyrations in the world markets, the Nasdaq's role in directing the trend for the technology sector in particular and the stock markets in general is under threat.

The 65-point gain in Sensex looks like a breather for the market after Wednesday's wild gyrations and the accompanying 134-point fall, feel market players. After the markets closed on Thursday, the Sebi's FII investment figures show a net outflow to the tune of Rs 278 crore.``In case the Nasdaq also closes lower on Thursday night, we are in for a major fall on Friday,'' brokers said.

Further, the rising outstanding positions on the BSE, along with profit-booking by FIIs, is another cause for concern for the market.According to a BSE dealer, ``the operators can't hold on to the stocks at this levels, unless the domestic institutions and the FIIs give some support to the market. With outstandings in excess of Rs 3500 crore, we are likely to see squaring-off of positions on Friday, the last day of current settlement on the BSE.''