Stock Market Update

Highlights
of market movements during the fortnight:

  • Markets
    commence trading on a weak note. The Sensex plunges 174 points
    on the first day.
  • Sensex
    leaps 221 points on the second day registering one of its highest
    gains on a single trading day.
  • FII’s
    turn net buyers-worth Rs824.70 crore.

The
undercurrent remained bearish in the markets though the Sensex posted
a marginal gain of 3% over its previous level to close at 4586.
The wave of overconfidence that had swiped the markets immediately
after the polls has subsided. The stock markets are currently witnessing
a phase of non-activity. However, with the return of FIIs, the market
seems to have gained momentum.

Keeping
in line with the capital market reforms process, the Securities
and Exchange Board of India (SEBI) has decided to replace the current
settlement by introducing Rolling Settlement-settlements on a daily
basis. However, it seems unlikely to happen soon as the committee
that was appointed by SEBI to study the new settlement system is
yet to submit its report. If introduced, the stock markets are going
to wear a totally different look with settlements taking place on
a daily basis. One of the major effects of the new settlement system
would be a reduction in the speculative activity as the traders
would have to square up their positions on a daily basis as opposed
to a period of five days in the current settlement system. The new
system was originally proposed to be implemented from December 1999.

One
of the striking features of IT companies this year has been an excellent
financial performance in the first half of the current year irrespective
of their performance in the stock markets. Pentafour Software and
Exports, the Chennai-based multimedia major announced an impressive
financial performance for the first half of the current year posting
a 65% increase in net profit. Secunderabad-based Satyam Computer
Services announced its plans to enter into a 50:50 JV with US-based
Venture Industries to provide engineering services, software development,
and engineering and customization services to the global automotive
industry. The company has recorded an impressive financial performance
in the second quarter of the current year with a 67% increase in
net profit, which stood at Rs30.74 crore. The turnover and net profit
in the first half of the current year has risen by 72% and 68%,
respectively. Satyam’s share touched Rs1681, rising by 32% in the
past two weeks.

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