Bearish trend on Lyons Range

By A Special Correspondent

KOLKATA, JULY 8. The start of trading under the new system of rolling settlement on the Calcutta Stock Exchange last week was on a jerky note with nervousness in evidence for most part of the period among operators who seemed to be felling uncertain about the immediate outlook for a market.

Selling pressure got built up as a result forcing share prices downwards over a broad front with virtually all sections participating in this slide. The sentiment of the market turned extremely weak subsequently in the wake of announcement by the premier investment institution of the country, namely the Unit Trust of India, to the effect that they have shut down the window of the 37-year old popular and widely held mutual fund under US- 64 which imparted fresh nervousness among operators.

This in turn triggered further pressure in the market due to fears that UTI might unload large parcels of its strategic holdings in some of the key companies like Reliance Industries. Consequently share prices dipped further dragging the indices too along. The 40-share CSE index finished the week at 1741.41 points compared to the June 21 level of 1798.30 points.

The sentiment indeed improved somewhat towards the close of the week on the assurance by the Union Finance Minister to small investors that everything possible will be done to protect their interests in the US-64 scheme. The subsequent steps initiated by the Centre also restored some level of confidence. But the predominant tendency in the market even at finish was visibly bearish. Unless there is massive institutional support, both foreign and domestic, the trend is unlikely to get reversed in the near tern, senior operators said. In their view the mood is so bearish that it requires a strong does of bullish fervour to bring about a visible improvement and put the market on a relatively stable foundation.

Sources also said that till the general investors and market operators become fully acclimatised with the new system of trading, chances of a major uptrend in the market do not look bright. Meanwhile, there have been unpleasant developments in the market at Mumbai in the very first week of the introduction of rolling settlement.

For instance, the ACC scrip was traded at Rs.1 causing deep concern to investors and speculators alike. In another incident subsequently the RPL scrip was traded as high as Rs. 300 against its actual rate of Rs. 47. A section of operators here ascribed this disturbing development to the absence of circuit filter under the new system of trading as was available under the previous badla system. However, taking it to be a mischief by some interested traders, the Securities and Exchange Board of India has initiated a probe in the matter.

The bearishness of the market is fully evident from the price position at close as compared to the levels prevailing on June 29. The majority showed losses which were somewhat pronounced in select cases. The only counter which wound up in the plus territory was State Bank of India at Rs.223 (Rs.217.40), Telco at Rs.64.50 (Rs.62.00) and Grasim at Rs.305.00 (Rs.299.90). The rest of the list settled with losses and these included ACC, Tata Tea, Tata Steel, Reliance Industries and Hind Lever. The ITC counter staged a smart recovery to be traded as high as Rs.771.10 but reversed the trend subsequently surrendering a major part of the recovered ground to close marginally higher at Rs.756.80 reflecting largely selling pressure at higher rates.

The technology counters stayed weak with all the frontline scrips posting losses as the week finished. Reports said that there had been purchases on behalf of FIIs in some of the technology shares as well as the cyclical ones but this did not help provide a major cushion to the falling trend in share prices. The final day's session was also marked by bearishness with little sign of an immediate change for the better in the market trend.

Senior operators here feel that the coming days are also likely to witness identical trading conditions unless of course there is a major development capable of lifting the morale of the bourses substantially upwards.

Marketmen have generally felt encouraged by the exceedingly good monsoon precipitation during June in as much as it will aid the agricultural operations in a big way. Normally this one factor would have imparted a strong uptrend to the market but this time it has not done so primarily because of the overwhelmingly bearish mood that overtook the bourse right from the start.

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