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Will Clinton's visit spark off a rally?

Aravamuthan Sasikant

US President Clinton's visit has not really excited the investing community, if the rise of a mere 27 points in the Sensex over Friday's close is any indication. Last week alone, the Sensex had lost 200 points.

Though Clinton's arrival was eagerly awaited, it would seem that the investing community has not been linked too many expectations with his visit as is reflected in today's market. The absence of a top-level business delegation has also acted a dampener.

A visit by Lawrence Summers to Infosys Technologies's headquarters in Bangalore had sent the stock into an upper freeze session for a couple of days.

Will then the Clinton visit cheer a falling market? Ramesh S Damani, a leading BSE member, says, "So far, his arrival has not made any visible impact on the market or on sentiment. This could, however, change when he reaches Hyderabad which may lead to buoyancy in the market."

Why is the market so indifferent to Clinton? There are external factors. One is the linkage of our market to the Nasdaq, and the year-end considerations. The Nasdaq fell 188 points last night and the US tech market is quite edgy. "We should realise that the performance of the Indian market is linked directly to the performance of the Nasdaq. Second, this week is the last week for the financial year-end, and investors and speculators are staying away from the markets or booking their profits/losses," adds Damani.

What can improve market sentiment? "The announcements which could improve the market sentiment and, in turn, the buoyancy, are his pronouncements on H1 visa. This is awaited by the market, but no major expectation is built around it," says Paresh Khandwala, director of Khandwala Securities.

Brian Brown, managing director, W I Carr Securities, says, "The visit does not have a major expectation built-up. Plus, the delegation that is accompanying the President is also not very weighty, as it does not have a single representative of a Fortune 500 company. However, Clinton's visit to India has sent out a strong signals about India being a serious investment destination that investors should not ignore."

The financial year-end, too, is playing a major role in depressing the market sentiment in the last two weeks, say analysts in unison. But a section of the market welcomes this downtrend as a healthy correction and a consolidation for the next major run. "Even the foreign institutional investors are waiting for this visit to get over so they can raise further funds abroad to invest in the Indian equities story," adds Khandwala.

This could probably lead to a bull run in the Indian equities from the first or second week of April 2000. Brian Brown says, "If there is a major announcement, then we can see a good run in the market. More importantly, this visit has sent out a strong signal to the investing community across the world and may result in an increase in FII inflows."

After the Clinton visit, we could see the market testing new levels, but quality stocks will drive this rally and there won't be a haphazard, across-the-board bull run. There seems to be consensus amongst most market players and fund managers on this point.

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