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Silence before storm?

Markets remained flat over the week. Sensex and Nifty refused to budge. But positives outweigh negatives given the series of government's action in recent weeks. The market is delicately poised at it current levels. Is the market silence pointer of a post-budget storm either way? Let's see….

Equity prices ended the week flat in thin trading sessions. The BSE Sensex ended 2 points higher at 3604.08 points. With budget round the corner, something strong and positive is expected from the Finance Minister to boost market sentiment - All the best, Mr. Sinha.

Markets remained flat over the week on thin volume. The BSE Sensex ticked 2 points while the NSE Nifty closed 3.5 points higher. Not bad, given that previous week's big movers, the PSU stocks faced profit booking. Moreover, the budget anticipation kept investors on the fence. The average turnover fell to Rs 3314 crore down 10 per cent over the week and 25 percent over the fortnight.

But FII's were bullish. The favourable FDI norms in private sector banks and optimistic about the budget, FIIs bought stocks worth Rs. 507 crore. Domestic funds were net sellers to the tune of Rs 91.5 crore. In 2002 year-to-date, domestic funds have been persistent sellers with net sales amounting to Rs 833.6 crore. Understandably so, in the absence of sizable inflow a new fund or an existing equity funds.

The hike in FDI limit in the private sector banks from 20 percent to 49 percent pushed the market up 34 points on Monday. The market slid in the next two trading sessions as investors took profits in PSU and banking stocks. Further dampening the spirit was the speculation that the coming budget may see a rise in defense spending.

In the final two sessions, however, shares moved higher. Modest buying in select old economy, pharma and banking stocks halted the slid. Whereas, steel stocks rose on the hope of a reduction in the excise duty in the forthcoming budget, the prospects of better monthly sales gave the needed stimulus to the auto stocks. Ashok Leyland and TVS Motors were the biggest gainers. Among pharma stocks, Ranbaxy was in the limelight as it is likely to get the US FDA approval for a new drug ceferoxime axetil. Overall, BSE Healthcare Index gained 4.1 per cent over the week. Though, the pharma stocks saw action, the tech stocks did not fare well. NASDAQ hangover was still prevalent through out the week. BSE IT Index shed 2.2 per cent.

Among the equity funds having higher exposure to PSU stocks, UTI Petro lost 2.04 per cent and GIC Fortune gained 0.6 per cent this week. On an average, diversified equity funds were down 0.13 per cent over the week.

In a move to tighten insider-trading norms, the SEBI has amended the respective clause in the SEBI Regulation Act, 1992. Now, all listed companies will be required to declare a time period during which their employees and directors will not trade in the company's shares. This time period will be applicable around the time of announcement of financial results, issuance of securities and any other expansion plans or new projects and any change in policy.

In US, the technology-laced NASDAQ ended the week down 4.5 per cent and the Dow Jones inched up marginally by 0.6 per cent during the week.

Outlook Range bound market ticks on speculative interest. But the Positives outweigh negatives given recent government's action. The keenly awaited union budget will only chart the market's direction. Government's pre-budget actions inspire optimism. And the market's current level is well poised for a surge if we get to say, "Thank you Mr. Sinha".