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Market's Good Friday

Caution was the order while temple crisis loomed. With peaceful end of the crisis, markets worry will shift to concern about earnings to justify current valuation. And the wait for earning will drive market turbulence in coming weeks.

Caution was the order as temple crisis prevailed through the week. And with a peaceful end to the crisis, markets gained on Friday and lost just a percent on the Sensex and the Nifty. After initial slip, PSU and cyclical stocks gained ground. Unlike previous week, the frontline technology stocks were not in the run this time.

The combined trading volumes at both the exchange was in oscillatory mode. The foreign investors were on sidelines and their net investments dropped to less than Rs 100 crore, after four weeks of hectic buying. The domestic funds also remained a net seller with aggregate pullout of Rs 145 crore during the week ending March 14. To give high dividend in their equity funds before March 31, domestic fund sold equities worth Rs 277 crore during the month.

The government's divesting of VSNL and IBP early February acted as a kick to drive the market brom its narrow range movement. Since then, the BSE Sensex has clocked a smart gain of 305 points (9 percent) till date. This gain despite unfavourable climate with riots and temple crisis reflects market strength, which can gather momentum now.

With profit warning and downgrades of US tech giants, the tech pivotals shed their previous week's gains. However, new orders for second rung technology stocks kept the mood alive. The BSE IT Index and Nasdaq moved in tendem, losing 3 percent during the week.

MNC Stock Delisting
In recent year, multinationals have made a series of open offer to acquire over 90 percent stake in their Indian subsidiaries, paving way for delisting of stock. The prominent ones include -- Britannia, Cadbury India, Nestle, Reckitt Beckinser and Atlas Copco. The open offers present a good opportunity for investors to realise a premium on the prevailing market price. But this trend will substantially reduce the universe of quality stocks for equity investors.

Peaceful end of the temple crisis last will have a positive effect. This should catalyse FII investment on hold. But concern about earnings to justify current valuation prevails. This will drive market turbulence in coming weeks, till first few results help chart the market course.