Three new barometers underscore upturn

Metals index surges more than 15%, while auto index looks up 9.65%

The three new sectoral indices, introduced by the Bombay Stock Exchange (BSE) a month back, have largely succeeded in reflecting the market sentiment, and have thus complemented the set of eight sectoral indexes already in operation.

The BSE Metals Index has surged more than 15 per cent in the last one month to 4,884.73 on September 24. In the same period, the BSE Oil &Gas Index was up 9.74 per cent and the BSE Auto Index gained 9.65 per cent. The benchmark BSE Sensex has risen 9.82 per cent in the period.

Market sources said the disparity in performance of the new indices was a reflection of the investor sentiment.

While metal scrips were in action on the back of strong demand and high prices of metals worldwide, the overhang of rising international oil prices was felt on the other two indices.

Sources added that despite the cyclical nature of these industries and the particular events playing on the sentiment now, defensive stocks are still posting healthy returns.

The BSE Healthcare Index was the biggest gainer during the one-month period, up 15.99 per cent.

Sources said there is much more action in mid-cap pharmaceutical companies but its is not reflected in the indices as many mid-cap pharmaceutical stocks are not represented in the healthcare index.

Surprisingly, despite the listing of TCS on August 25, the IT index has been an underperformer, gaining only 5.56 per cent.

The TECk index was up 5.27 per cent in the same period. Analysts pointed out that some major components of the sectoral indices have performed better than their heavyweight peers, which has led to this disparity.

Also, the biggest gainers have been the current month's flavour, while some others had already risen earlier and witnessed profit taking.

Sources expect some churning amid volatility towards the expiry of the September 2004 derivatives contracts on Thursday.

The transaction tax is also likely to become effective from Friday, October 1, and this too is expected to have an impact on the sentiment.

A section of the market is of the opinion that marginal selling pressure will be seen as players try and take advantage of the reduced short-term capital gains tax.