The markets: Marking time

The boom is over - or is it? The market is now where it was a month ago and, although it seems to have steadied somewhat, there is no knowing when the downslide will begin again. The so-called anti-inflationary package may have given it a jolt but the package does not really touch the corporate sector except marginally - 1 per cent hike in the bank rate is not all that earth-shaking - and that is perhaps one reason why share prices did not really come tumbling down.They may do so, however, if the Government, in its infinite wisdom throws in another packet, though at this stage it seems unlikely. The Reserve Bank governor has warned that any curb on investment is ultimately counterproductive and the Government will have to think twice before applying further screws.When things are in a flux - as they obviously are going to be for some time to come - one can do two things: just stay put until the storm blows over or swim against the tide. Out of 70-odd scrips that feature in India Today's Active Stocks only four have actually gone up while nearly all the rest have gone down and a few stayed put at last month's level.The scrips that have managed to put up a brave front are Atlas Copco, Bajaj Auto, Indian Cable, Reliance and Remington Rand. It would not be a bad idea to keep a watch on these scrips for the next few weeks and even pick up a few, though some of them are rather high-priced.Animated Suspension: The corporate news is by and large quite encouraging and a number of companies have stepped up their dividends. Among these are ITC, Ahmedabad Electricity, Indian Rayon and Indian Card Clothing. Mico is about to declare a bonus issue and Standard Mills of Mafatlals has already done so.A good deal of the fat in the form of higher dividends as well as bonus issues may be due to inflation, but that is what stocks are meant for. Companies that cannot raise their head above the high tide of inflation will one day be swept away and not be seen again for a long time.The uncertainty on the stock market front - mainly because of government measures - is likely to lead to a flight of money from stocks to commodities including bullion which, for some reason, is really at a low ebb. Gold prices are higher than a year ago but they have not kept pace with share prices and are not likely to pick up in the near future.Silver prices are actually lower than last year's levels and may go down further in sympathy with the world-wide bearish trend in bullion. One reason why gold and silver have not picked up is that most of the spare cash is locked up in foodgrain stocks which the traders are supposed to have built up during the procurement season.The stocks will probably be released after the monsoon when demand for grains is always high, unless the Government tries to flush them out just as it is doing with sugar. Some of the spare cash will then find its way into the bullion market and the rest in the stock market.The share market boom is therefore anything but over; the market is just marking time waiting for the clouds to clear and, of course, waiting for those crores now locked up in grain warehouses and elsewhere in the north.Until then, the market will be in animated suspension and if the Government stays its hand it may even edge upwards a little, for most companies are doing well and the blue-chip ones better than most. In fact, stock markets all over the world are doing reasonably well, even in Britain, despite riots and the worst recession since the '30s.Published By: AtMigration Published On: Nov 14, 2013 13:33 IST--- ENDS ---

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The markets: Marking time

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