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Marketmen keep fingers crossed

Our Bureau

MUMBAI, July 2

A SECTION of marketmen believes that today's drop in market volumes is a temporary phase.

"Today's trading saw an almost 50 per cent drop in volumes, which is quite sharp. However, this was only to be expected what with most participants sitting on the sidelines. It is a bit of a chicken-and-egg situation at the moment but should improve over time," said Mr Vetri Subramanium of SSKI Investor Services.

While fears over the pitfalls of the new regime were bound to spill over into trading today, some amount of additional excitement was provided due to a broker inadvertently punching in a sell order at Re 1 in the ACC scrip on the BSE in the cash counter.

Even as the stock exchange issued a formal note annulling trades done below the stipulated 20 per cent price band, some brokers chose to blame the new system for the ``aberration''.

A section of operators, however, chose to take an objective view. "Such glitches did occur in the so-called old regime also. The market is going through a transitionary phase and, as such, will take some time to find direction," a broker with a leading b roking outfit said.

Reiterating this was Mr Arun Kejriwal of KRIS who opined that it was all a question of getting used to the new system. "In about three weeks' time the market will find its comfort level," he added.

"In a rolling settlement environment, whether one buys or sells, it will all be delivery-based transactions. Obviously volumes will dry up and one is bound to witness a lot of volatility," Mr K. Ramchandran, head of research, Tata TD Waterhouse, said.

Equity analysts however took a more holistic approach about the beginning of this new chapter in the history of the Indian stock market.

"The principle of investing will undergo a change which will bring about corresponding changes in the most active and favourite stocks of the market. Some of the neglected scrips are likely to once again capture market interest," an analyst said.

Over the last one year, a large number of scrips which were in the compulsory rolling settlement had become underowned stocks as a large number of speculators shied away from them.

However, under the new system these scrips are unlikely to face any strong resistance in their upward journey as no hidden sellers are likely to emerge in these stocks.

Therefore, it is no wonder that leading investment experts like Mr Gul Tekchandani, chief investment officer, Sun F&C Asset Management, are convinced that the new investment clime will throw up compelling valuations.