The Telegraph
Since 1st March, 1999
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Sinking feeling: How deep is the stock pit'

Mumbai, April 22: If you thought the markets have touched a rock bottom and indices have no place to go but up, there are Cassandras predicting that things could get worse.

The sensex today shed 11.54 points to close at 2985.54 and a section of the market says that even the October-2002 low of 2820 will be tested in the coming days. And the bear grip will be complete when old economy stocks join the fray, analysts say. The sector has so far held its own in the bear carnage that saw technology stocks melting after Infosys came up with a muted guidance.

The prevalent mood in the markets is morose, yet few can put a finger on what is bothering them. This is despite efforts by the government to kickstart a flagging stock market and breathe life into the dormant primary markets. The sentiments have only deteriorated.

“Where do we start,” asks a perplexed Karthik Ramkrishnan, an analyst at Sunidhi Consultancy Services. He expects the markets to take a definite direction, for better or worse, once Reliance Industries and Satyam Computers announce their annual results.

The nation-wide truckers’ strike, the controversy over value-added tax (VAT) and SARS will affect the infotech and tourism sectors. Moreover, a poor monsoon will definitely have an impact on the first quarter performance of many old economy companies this fiscal, Ramkrishnan said.

ICICI Bank’s report on the state of the markets is more direct in its prognosis. According to the report, old economy stocks have been a happy hunting ground for retail and institutional investors, ready to commit funds both in the long and medium terms.

The resurgence in old economy stocks has been led by investors focusing on the banking sector. “So far, many of these commitments are still in profits as they managed to come back to the highs. But it would not take much of an effort to swing back to those zones where a large part of the commitments start losing,” the report said. The next bear market bottom could definitely be one where we reach the proverbial stage of “no place to run and hide,” the report says. However, the report is clueless about when that stage will come. What it feels is that a sensex tumble below 2820 is imminent.

Ramesh Damani, a prominent BSE broker, is totally dismayed by the market trends. He says, “You can't make money in this market. Mainline stocks are not growing and that is not helping the market,” he said.

What is more disheartening to brokers like Damani is the poor volumes being recorded. BSE's turnover on Tuesday was Rs 952.21 crore, while on Monday it was even poorer at rs 827.42 crore. After a long weekend it was more pathetic for investors.

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