Indian stocks to remain flat

Indian stocks to remain flat
REUTERS

BOMBAY, JAN 23: Indian stocks are now in a lull phase after hitting all-time highs earlier this month, and in the absence of new factors are likely to remain flat this week, analysts and dealers said.

Selective stocks, particularly those reporting earnings numbers, will be active, however, they said. Key among these are ITC, Tata Engineering and Locomotive Company Ltd, State Bank of India, Zee Telefilms, Ashok Leyland, Grasim Industries and Ranbaxy Laboratories.

"The markets should be flat," said John Band, managing director at ASK Raymond James Securities India. "It is too expensive for foreign institutional investors to put their money in and the badla rates are low enough for local investors to hold onto their positions," he said.

Badla is the interest rate on carry forward positions at the Bombay Stock Exchange. On Saturday, the rate was 21.75 compared to 15 per cent in the previous week.The top-30 share Bombay Exchange index gained 0.88 per cent or 48.22 points to 5,423.05 in the week to Friday. Ithit a record high of 5,668.28 on January 10.

Data from the Securities and Exchange Board of India (SEBI) showed foreign funds were net sellers of $76.1 million worth of equities from January 3-20. They had invested over $1.5 billion in 1999.

"There is no clear indication of what is happening about the buying that everyone was expecting from foreign funds," said Bimal Parekh, director at Sunidhi Consultancy Services.

"There are only speculators and some local funds in the market," he said.Many in the market believe the index has the steam to power ahead to the 6,500 levels by the year-end, but with intermittent corrections. Some of that buying might start only after the federal budget is presented at the end of February, dealers said.

Unlike the market-friendly budget last year, this one is expected to have stringent measures to contain the fiscal deficit, analysts said. "The market is looking for big cuts in subsidies, " said Band.

"There is no point in giving any more market sops, they have hadenough already. It is better to create more confidence in the economy and a big step there will be to cut the fiscal deficit," he said.