New price zone for bourses seen after polls

The stock market is braced to enter a new price zone after the general elections, but for the interim period, they are expected to remain range-bound, according to analysts. Under the circumstances, large-cap defensive counters are in favour, while operators wait for clarity in the political scene.

Nandan Chakraborty, head of research at Enam Securities, told Business Standard: "Most of the existing information seems to have been already priced in, and the players are now waiting for the new drivers. These could be big-ticket in nature and events that convey the proof of intent of the government such as strategic sale of sizeable public sector undertakings, steps towards rupee convertibility etc."

But Chakraborty added that these triggers can be provided only by a stable, strong administration. Jitendra Panda, vice president, Motilal Oswal Securities, says, "Investors are looking for 'safer' stocks and large-cap counters have the depth and these companies have the growth potential to match."

Chakraborty feels that the markets may remain range-bound in the near term and favour defensive large caps.

"If confidence builds up of a strong government coming to power, we expect mid-caps, and interest-rate policy sensitive shares to perform the best," he says.

Vijay Saraf, chief operating officer, Centrum Securities, says index stocks look like a safe bet till a clear trend emerges. He added that the market may look at Sensex levels between 5600 and 6200 in the interim period.

Rajesh Kamdar, dealer at a local brokerage, says the markets corrected recently due to supply fears, electoral uncertainty and year-end liquidity squeeze.

The refrain on the street is that the long-term uptrend for Indian stocks remains intact, as is evident in the confidence that global funds have placed in the local markets.

Foreign institutional investors (FIIs) have brought in a total of Rs 18,099.50 crore into India in 2004 so far.