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Bear Grips Again

War scare dragged the market down, as nervous investors continue to rocks brief rally to book gains. The short-term market dynamics looks disfavour to supporting a rally. This Christmas looks like party time for market bears only.

War scare dragged the market down. The probe of FIIs Indian operations was an added dampener. The market was down 118 points on the BSE Sensex (3.52 percent) and similar slip on the NSE Nifty (37 points, 3.40 percent) during the week. Technology stocks were on a free fall -- front-line as well as second-rung, guided by the US tech major's profit warning. Cement stocks also lost, dissolving the previous weeks gain as the much awaited price hikes did not materialise. In the absence of institutional support of domestic as well as foreign funds, the combined average volumes at both the exchanges dropped from last week's Rs 4800 crore to Rs 4279 crore.

Market was stirred by the enforcement directorate's freeze on accounts of 16 foreign institutional investors for illegal misappropriation of funds. This lead to 73 points fall in Sensex in a day.

In a move to realign the Indian bourses with international trading norms, the SEBI has decided to cut short the current T+5 rolling settlement period to T+3 days. Coming in effect from April 2002, it would mean that shares would have to be delivered on the fourth from the date of transaction. Though this will negative impact markets in the short-term, but a shorter-settlement cycle will enhance the liquidity in the market with faster payout and delivery.

Following the stocks market scam earlier this year, the watchdog had clamped down the badla system and introduced the T+5 rolling settlement in 414 scrips in July '01. The remaining scrips will also come under rolling settlement mode from the last day of year 2001. Besides this, the positions in the scrips which did not go in to demat mode by end of September '01 will have to be settled on the same day untill the specified changes are made. The coming weeks may see the SEBI probing into three regional bourses, as the hectic trading activity at these bourses spiked off the return of private financiers (badla traders).

On the Wall Street, an optimistic revival sentiment in 2002 and unexpected rise in consumer confidence Index capped the otherwise volatile Dow Jones which gained 2.2 percent during the week while, the Nasdaq closed flat.

Outlook
Market gripped in uncertainty is unlikely to chart direction. Nervous investors will continue to rocks brief rally to book gains. Besides, the enhanced coverage of the rolling settlement universe will also reduce activity in second rung stocks. This Christmas looks like party time for market bears only.