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Up, up and ?

Technology and index heavyweights lead the pack of stocks this week. Investors' confidence was back with a massive increase in trading volume. In the near-term, the outlook remains cautious in the absence of a suitable trigger in the market.

Indian stock markets continued its last week's upward journey. The BSE Sensex gained 108 points (3.5 per cent) and the S&P CNX Nifty ended the week up 30 points (3 per cent). Frontline technology stocks and index heavy weights led the rally.

On the institutional front, FIIs returned to market and made net-investment of Rs 49 crore, whereas, mutual funds turned net-sellers after being net-buyers for three consecutive week. Equally interesting was the upsurge in investors' confidence. This was amply reflected in the 41 per cent rise in the combined average turnover at both the exchanges.

Technology stocks once again stole the show. The BSE IT Index moved up for the third consecutive week – 3 per cent this week. Thus, in November till date, the index is up 16 per cent. Frontline stocks like Infosys Technologies (up 6.7 per cent) and HCL Technologies (up 6.2 per cent) led the rally. These stocks surged following the gains in NASDAQ, where Hewlett-Packard surprised the market with an upbeat revenue forecast. Microsoft Chairman Bill Gates, who has announced Rs 2,000 crore investment in India, has also added to the positive market sentiment.

Apart from technology stocks, index heavyweights also witnessed heavy buying interest. Reliance Industries gained 6 percent as the new gas discovery by it turned out to be 50 per cent larger than the initial estimate. Renewed buying in other index heavyweights like HLL and ITC led to a 2.7 per cent rise in their share prices.

The debate over disinvestment continues this week too. Though the Finance Minister, Jaswant Singh is optimistic about the disinvestment of Hindustan Petroleum and Bharat Petroleum, the disinvestment minister Arun Shourie has said that the shop is closed. In this political battle, the major sufferers are the company themselves, as their valuation are getting cheaper day by day. HPCL lost 5.8 per cent and the BPCL ended the week down 0.5 per cent. Another disinvestment candidate, Shipping Corporation lost 11 per cent, as one of the potential bidders -- GE Shipping -- decided against their plans to acquire it.

Banking stocks also came into action following the passage of Securitisation Bill in the Lok Sabha. The bill is likely to give banks more power to seize defaulters' assets without additional court procedures. The sector responded positively to the bill and the share price of State Bank of India jumped 5 per cent and that of ICICI Bank zoomed 7 per cent.

The two-wheeler segment is on a rapid growth trajectory. The sector reported 18 per cent rise in sales in October largely on account of discount and competitive pricing. This coupled with the expectation of higher sales next month, drove share prices of these companies sharply upwards. TVS Motor surged about 7 per cent, Bajaj Auto gained 4.12 per cent and Hero Honda ended the week up 4.6 per cent.

In an interesting move, SEBI has stalled Grasim's open offer for 20 per cent stake in L&T. The Rs 190 per share offer was suppose to open on December 9, 2002. But, the investor protection cell and the FIIs claim that the offer was unfair led to SEBI's intervention. Consequently, the share price of L&T gained 5.1 per cent.

Outlook
This is the fourth consecutive weekly rise on Sensex. The more interesting is that the market is led from the front by large-cap index heavyweights. The key driver has been the technology stock. In the near-term, however, much will depend on the news coming out from the disinvestment ministry. We may see a correction in share prices in absence of any trigger.