The debate over the Indian markets mirroring the Nasdaq has been turned on its head if happenings of the past week are any indication. The Bombay Stock Exchange (BSE) Sensex seems determined to stand on its own feet of late, disregarding the Nasdaq nudge.
On the last closing for the week, the Nasdaq stood at 3816.82 points, up just 2.6 per cent over its previous close of 3754.87 points, while earlier in the day, the BSE Sensex rose by a whopping 140 points to close at 4693.88 points.
The story was almost similar on Thursday, when the Nasdaq gained marginally by 16 points to 3723.27 points, the Sensex made a whopping 218.63 points gain within hours of commencement of trading.
Similarly, on May 2, the Sensex fell by a massive 285.33 points, one of the biggest falls in a single day, to close at 4372.22 points. On the same day, the Nasdaq composite was comparatively stable, shedding a marginal 21.37 points.
It should be noted that due to differences in time zones, trading at the BSE closes by the time it begins at Nasdaq.
It brings to focus a view among some players that the bourses have gained some sort of psychological independence from being and acting as a proxy of Nasdaq.
While some participants of the opinion that this behaviour of emulating Nasdaq was irrational and immature in the first place, which had to change, the other section feels it has more to do with corrections in some old economy stocks which lifted the Sensex to that extent.
This section feels that these economy stocks, which are fundamentally sound, were ignored and remained undervalued for quite a while. In other words, a correction in these stocks was long overdue.
A section of the market always felt that as Indian markets were dominated by software companies and not dotcoms like at Nasdaq, there was no reason for the local bourses to crash in the wake of a crash at Nasdaq which, in turn, was owing to people having doubts on the valuations of dotcom companies.
The previous week saw some big institutional buying at economy counters lifting their valuation and the sentiments toward these stocks.
Some of the frontline IT stocks made a smart recovery in the last two trading sessions. This has turned the question of validity of valuation commanded by ICE sector stocks on its head.
On the other hand, bluechips such as Reliance Industries, HPCL and MTNL made smart recovery. Most of them gained by 8 to 12 per cent on an average on good institutional buying support after falling at the beginning of the week.
It seems like some maturity has finally dawned on the Indian bourses which were mimicking any and every movements on Nasdaq. It should be noted that recovery has generally been a broad-based one rather than being restricted to just few key stocks, which has been the case earlier.
A section of marketmen are of the view that the gains in infotech scrips is likely to continue irrespective of the general trend in the market.
Barring Zee which posted handsome gains, none of the other media stocks seem to have gained any momentum. It would be interesting to note their behaviour in coming few weeks.
