The markets: Temporary slack

What goes up must come down and there are already signs that the dizzy heights that the share market had gained immediately after the budget are proving a little too dizzy for some bulls.There has been a slight correction downwards, which is natural under the circumstances, but chances are that the 'recession' is temporary and the stocks will resume their upward climb once the implications of the budget begin to sink in.There are people who are still not quite sure whether the budget is really all that 'soft' and the finance minister means what he says, but they are slowly coming round to the view that the finance minister is not pulling a fast one and when everything is said and done, the budget should have a bullish impact on the market.Traditionally, however, the impact of the budgets begins to fade out within about six weeks of their presentation in the Parliament and things should be clearer from this month onwards.Some shares - like Larsen & Toubro, Texmaco and Ballarpur - are high not because of the budget but because of bonus considerations. Larsen & Toubro has gained 33 per cent in less than a month and Ballarpur a little more than that.Texmaco has also done pretty well and so apparently has Escorts which, only a few weeks ago, was languishing and had almost touched the year's bottom.The surprising part is that it is engineering shares which seem to be doing the running and some of them, like Bajaj Auto, are being quoted as high as Rs 1,700 (face value Rs 100).Larsen & Toubro and Escorts are also mainly engineering companies and so is Western India Erectors which nearly touched Rs 100 (face value Rs 10) last week although the company went public only a year or so ago. Hindustan Dorr-Oliver and Ingersoll-Rand, both of them engineering companies, are also top flyers in the stock market.Surprisingly also, chemical companies are not doing as well as they should, some like Nocil having actually done worse than last year. One reason for the better-than-average performance of engineering shares may be the heavy capital goods orientation of the Sixth Plan but that does not explain why a scrip like Mahindra & Mahindra should be riding so high.The only possible conclusion is that the economy is getting its second wind and, plan or no plan, things are at last beginning to move.However, most scrips are so highly priced that the intending investor can do no more than twiddle his thumbs and perhaps book his profits while the going is good. He might also give the stock market a wide berth for the time being and turn to - guess what - the bullion market, where there should be good pickings.Published By: AtMigration Published On: Nov 25, 2013 11:52 IST--- ENDS ---

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The markets: Temporary slack

What goes up must come down and there are already signs that the dizzy heights that the share market had gained immediately after the budget are proving a little too dizzy for some bulls.

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