Bears send market down by 5 pc, but FIs save the day

Leading software firm Infosys Technologies rose 14 per cent from its day’s low of Rs 6,651.05 and closed at Rs 7,550, up 4.4 per cent compared to Wednesday’s close. Reliance Industries closed eight per cent higher at Rs 340.40. Operators said funds, which had sold Reliance in the last one week following disappointment over the lower share buyback price, bought back in following the firm’s strong earnings growth reported on Tuesday. The stock is still 12 per cent off its peak price of Rs 380 touched on February 11.

Said a broker, “The reason for infotech stocks being continuously the worst hit is that a syndicate of bears has been targetting them selectively, allegedly on the reckoning that a leading bull has huge holdings in these counters.” The market got a respite when financial institutions and foreign institutional investors (FIIs) made heavy purchases in software scrips like Pentamedia Graphic, Digital Equipment, Infosys Tech, Satyam Computers and some cyclicals.

Both the local exchanges are closed on Friday on account of "Good Friday". Though the downfall of shares started with the technology scare on the Nasdaq market, investors had turned completely cautious and ignored the subsequent bounceback of overseas markets.

Of the 117 losers in the specified group, nine countersincluding five IT scrips were locked in the lower end of the circuit filter at close. RIL hit the upper price band. “The market had been getting smashed around for quite sometime. It had to find support somewhere," said an analyst.

"But it is premature to say whether the recovery can sustain as it was not broad-based," he said. The market recovery was on a narrow base, and declines outnumbered advances by 1,099 to 363. The collapse was triggered by the fall on Nasdaq exchange last week, but the market had since been on a steady downward trip, ignoring even the US markets’ recent stunning rally, analysts said.

“It is a matter of sentiment. Otherwise nothing has changed fundamentally in the last two weeks. Bears have taken advantage of the Nasdaq fall. Besides there is this talk of infotech stocks being overvalued. Bears just went for the jugular," said a market source. The benchmark Sensex has now lost 28 per cent from its mid-February all-time high of 6,150.69.

Analysts said stocks in the Indian market had reached very attractive levels and all that was required was for some big sustained buying to take place. Several infotech shares have come off 50-60 per cent in recent times.But retail investors were guaranteed to stay away until the market showed a distinct change in trend. Foreign funds have been net buyers in Indian markets in the last two weeks with data from the Securities and Exchange Board of India showing they bought a net of $397.8 million from April 3-18.