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Old industrial stocks seen boosting Indian markets

BOMBAY: Bargain hunting in the beaten industrial stocks should boost the Indian markets this week, but analysts see only a mild recovery as investors, jittery after last week's volatility, take profits at higher levels.

Some analysts expect a stronger rally, if the market regulator relaxes the margins levied on brokers' outstanding positions.

"Most brokers have cut positions due to margin pressures. If SEBI (Securities and Exchange Board of India) takes some steps to reduce these pressures, we could see a big recovery," Rajiv Sampat, director at Parag Parikh Financial Advisory Services said.

Reduced liquidity flows severely dented Indian stocks last week and share prices fell sharply amid thin volumes.

But not truly representing the broad market pullback, the benchmark Bombay Stock Exchange index fell only 1.42 percent or 76.49 points to 5,301.78, after moving in a 600-point range during the week.

Speculator unwinding also pulled down net outstanding positions on the Bombay exchange. It stood at 32.33 billion rupees on Friday compared to 41.15 billion on Monday.

Analysts see a sharp recovery in the cyclical stocks, many of which dropped to their yearly lows in last week's correction.

"Consumer goods and utility stocks look very attractive," Ramesh Damani, member, Bombay Stock Exchange, said.

Sampat of Parag Parikh added commodity sector to his list of bargain buying.

The outlook for the high-flying technology sector is mixed as analysts see buying restricted to the key stocks in the sector.

But, sustained strength on the technology-laden Nasdaq, which influences investor sentiment in the Indian technology stocks, could trigger a broad sector rally.

Analysts expect Indian Hotels, Industrial Development Bank of India, Tata Chemicals and Tata Power to lose further ground after the Bombay Stock Exchange on Saturday decided to remove these stocks from its 30-share benchmark index with effect from April 10, 2000.

Their replacements, pharmaceutical firm Dr. Reddy's Laboratories, Reliance Petroleum, software firm Satyam Computer Services and media and television firm Zee Telefilms are seen rising on renewed fund buying.

Pharmaceutical firm Pfizer Ltd is expected to rise on strong first quarter earnings growth and announcement of a bonus issue in the ratio of one share for every one share held.

Telecommunications firm Mahanagar Telephone Nigam Ltd on wide expectations of its listing on the New York Stock Exchange this week.

Cigarette maker ITC Ltd after the firm raised cigarette prices on Friday to offset the hike in excise duties.-Reuters