The Hindu Business Line : Select sectors may attract attention in a crucial week

IT is now quite clear that missiles, if at all, will hit the Iraqi targets only after Mr Jaswant Singh presents his Budget proposals in Parliament on February 28. For the domestic stock market, this translates into a week's freedom from the war overhang, if any.

The indices seemed poised for an upward trend in tune with sectoral expectations. However, new machinations around Ayodhya and Bhojshala are likely to prove as a damper for the market sentiment. On the whole, restricted optimism is likely to drive the stocks of sectors such as power and banking.

The United Nations inspectors are scheduled to place the updates on Iraq to the Security Council on Friday. If their assessment of the Iraq situation proves negative, the US will get the opportunity to pilot a second UN resolution for use of force, which could be taken up next week. This will mean a possible breather of a few more days for the stock markets.

As the trans-Atlantic row over Iraq pushed back the US plans for setting an early timetable for incapacitating the Saddam Hussein regime, the stock markets across the globe remained more or less firm last week.

The three key US indices — Nasdaq Composite, the Dow Jones Industrial Average and S&P 500 finished in the green with weekly gains of 2.97 per cent, 1.38 per cent and 1.59 per cent respectively. The FTSE improved 3.19 per cent. In the Asian markets, the Hang Seng managed to stay positive (0.53 per cent). But Nikkei slipped into the red with a week-on-week loss of 3.19 per cent.

At home, Dalal Street was relatively light-footed in its trading and price movements. The BSE-Sensex gained 83.79 points or 2.91 per cent.

The foreign institutional investors were net buyers in three out of four trading sessions last week. Though subdued, their total net positive inflow stood at Rs 68.90 crore. Mutual funds, however, continued to be net sellers.

According to Mr V.K. Sharma, a market analyst, local investors are weighing developments — be it geopolitical or otherwise — on a day-to-day basis.

"Since January 31, the Sensex has been showing higher tops and bottoms on the technical charts after bouncing back from the 3199 level. The next resistance for the benchmark index is around 3318, which it may cross on Monday itself," Mr Sharma felt.

However, according to him, Thursday's closing is likely to witness weakness on the expiry for February derivatives contracts. "However, the squaring off pressure may not be as pronounced as in the usual settlement day as a sizeable portion of the outstanding position is likely to be carried forward to the next month in view of the Budget announcement next day," he observed.

Mr Mathew Easow of matheweasow.com also felt the same way and added that a large chunk of the built-up positions has already been pared down. "Considering the Budget announcement coming on the last day of the week, a significant switch-over to March contracts was a distinct possibility," he said.

Mr Easow foresaw the Budget to be good for some of the sectors. "As it is, the Nifty seemed to have bottomed out. Depending on the Budget proposals, both the Nifty and the Sensex may close this week with substantial gain," he opined.

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