The Telegraph
Since 1st March, 1999
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Bargain boom in slump season
- Investors hunt for stock picks going cheap as markets flounder

Mumbai, March 21: Beware the ides of March! That was the day the BSE sensex suffered an 180-point haemorrhage, prompting many to predict a slide below 5000. This was just two months after some saw it vault to 7000.

Between the two extremes lies a gulf now teeming with bargain-hunters, rationalists who see beyond the swings of a market to fish out their picks in the turbulence.

“Share prices have fallen from the peaks and it’s a good time to accumulate. The sensex’s slump below 5550 will lead to more downslide,” CLSA, a leading foreign institutional investor warned its clients recently.

“The sensex has found support at 5550 in the past two months — testing it four times. The fall below 5550 on March 15 will lead to more downslide as the gains from 2904 points since May 2003 are retraced,” CLSA said.

It has painted a grim picture of the bearish cloud hovering over the markets in the United States and Taiwan, which, like India, are caught in an election frenzy. ICICI Securities, a leading investment banking outfit, said the market fall offers good buys.

DSP Merill Lynch Fund Managers, another leading foreign institutional investor (FII), is also upbeat about the current market scenario. DSP Merill Lynch managing director David Graham recently spoke to a cabal of fund managers on ‘We are bullish, are you’.

ICICI Securities has earmarked certain stocks that have fallen sharply on March 15 and termed them as value picks. Other brokerages have brought out sectoral reports in an attempt to pep up sentiments. They are also advising investors that the time is ripe to make an entry.

However, many analysts feel that as the financial year-end is approaching the share prices will continue to remain depressed.

Mutual funds will be buying far less from the market and may even be selling at times as redemption pressure peaks around this time.

Affluent investors and companies will be booking losses to square off their profits and file tax returns. They will re-enter the market in April.

Other factors could tilt the markets either way, said a dealer. The last-quarter performances of many companies will be out by mid-April and they will also affect the market.

With elections round the corner, the market will also see some companies forced to absorb rising input costs due to political pressure. All this will be reflected in the last-quarter performance, said analysts.

The revival of the primary market is also bothering the secondary (stock) markets. ICICI Bank, NDTV, Data Access and some other companies are waiting on the sidelines to enter the market. A bevy of PSUs has also lined up big-ticket IPOs after the elections.

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