TRENDS IN SECONDARY MARKET

TRENDS IN SECONDARY MARKET

Index Movement

The secondary market witnessed a mixed trend during the month of February 1999 as the market continued to fluctuate in a narrow range before reaching the peak at the end of the month. The BSE Sensex which opened at 3331.91 on February 1, 1999, closed at 3399.63 on February 27, 1999 after reaching a high of 3400.2 as on February 27, 1999, recording an increase of 67.7 points or a rise of 2.1 per cent. The BSE National Index opened at 1468.32 and closed at 1506.95, showing an increase of 38.6 points or a rise of 2.6 per cent during the same period.

The S&P CNX Nifty at NSEIL also showed similar trend during the month under review, as the index opened at 962.40 on February 1, 1999 and closed at 981.55 on February 27, 1999 recording a rise of 18.9 points. Nifty reached a high of 981 on February 27, 1999 and a low of 907.45 on February 9, 1999.. The CNX Junior Nifty registered a high at 1810.35on February 18, 1999 and a low at 1612.80 on February 9, 1999 showing a variation of 176.1 points (Table 16 to 19). Over the month, Nifty Jr. recorded a rise of 85.6 points or that of 5.1 per cent.

Chart 5: Movement of Major Indices

The volatility, however, was marginally lower during February 1999 compared to the previous month. The magnitude of Sensex volatility has declined from 5.26 per cent in June to 1.93 per cent in October. It rose again to 2.6 per cent in November 1998 and further to 2.87 per cent in January 1999. It declined 1.7 per cent in February 1999. The Natex, S&P CNX Nifty and CNX Junior Nifty also witnessed lower volatility in February 1999 compared to the previous month.

Ratio Analysis (Price Earning Ratio)

P/E Ratio	No. of Companies
	Forward	Others	Total
<5	52	822	874
>5 and <10	70	227	297
>10	148	233	381

Price earning (P/E) ratio of Sensex which was 12.90 per cent on February 1, 1999 went down to 12.67 per cent on February 9, 1999. It again moved upward till February 19, 1999 to 13.25 per cent and finally reached 13.43 per cent on February 27, 1999. P/E ratio of BSE 100 also moved in a similar fashion but was lower than that of Sensex. The P/E ratio moved in tandem with index of equity prices. Yields

on equity which registered a rise from 1.76 per cent in February 1, 1999 to 1.80 per cent on February 9, 1999, moved either way before reaching 1.69 per cent on February 27, 1999.

Chart 4: Volatility of Major Indices

Month	Sensex	Natex	S&P CNX Nifty	CNX Junior Nifty
Jan-98	4.83	4.74	4.67	4.02
Feb-98	2.62	2.70	2.97	3.98
Mar-98	2.30	2.60	2.02	4.03
Apr-98	2.17	2.36	1.96	6.04
May-98	3.24	2.93	3.09	2.93
June-98	5.26	5.92	5.11	7.72
July-98	3.45	3.25	3.12	3.89
August-98	2.66	2.26	2.57	1.84
Sept-98	3.21	2.91	3.10	2.16
Oct-98	1.93	1.89	1.81	2.54
Nov-98	2.60	2.48	2.58	1.98
Dec-98	2.85	2.93	2.69	3.10
Jan-99	2.87	2.84	2.91	3.15
Feb-99	1.70	1.87	1.79	2.89

International Comparison of volatility

The graph of volatility for various countries show that Indian stock market witnessed the lowest volatility compared to Asian countries (such as South Korea, Hong Kong, Malaysia, Taiwan, Indonesia, Philippines and Japan) and US stock market. The volatility has become an endemic feature of stock markets but Indian markets have shown steadiness except for a few intermittent periods.

Date	Open	High	Low	Close	PE Ratio	PB Ratio	Yield (%)
01/2/99	3331.91	3361.92	3265.91	3265.91	12.9	2.38	1.76
02/2/99	3251.96	3279.98	3219.54	3236.76	12.79	2.36	1.77
03/2/99	3267.67	3283.22	3234.66	3277.57	12.95	2.39	1.75
04/2/99	3291.47	3301.54	3223.24	3236.42	12.79	2.36	1.77
05/2/99	3241.3	3246.76	3204.5	3215.35	12.7	2.35	1.79
08/2/99	3253.93	3280.63	3182.47	3183.64	12.58	2.32	1.8
09/2/99	3182.75	3208.71	3157.7	3207.71	12.67	2.34	1.79
10/2/99	3221.04	3308.88	3213.27	3307.49	13.07	2.41	1.74
11/2/99	3329.81	3360.19	3298.42	3313.4	13.09	2.42	1.73
12/2/99	3323.17	3351.84	3319.34	3337.49	13.19	2.44	1.72
15/2/99	3378.57	3394.01	3315.07	3315.08	13.1	2.42	1.73
16/2/99	3309.11	3345.74	3305.72	3344.68	13.21	2.44	1.72
17/2/99	3342.28	3366.55	3280.68	3336.42	13.18	2.44	1.72
18/2/99	3355.32	3406.28	3334.83	3351.05	13.24	2.45	1.71
19/2/99	3373.24	3389.99	3350.65	3354.92	13.25	2.45	1.71
22/2/99	3370.6	3397.33	3300.67	3303.89	13.05	2.41	1.74
23/2/99	3290.5	3300.44	3249.02	3283.97	12.97	2.4	1.75
24/2/99	3292.57	3297.38	3237.18	3287.53	12.99	2.4	1.75
25/2/99	3276.91	3311.84	3269.39	3281.29	12.96	2.4	1.75
26/2/99	3284.21	3288.18	3228.94	3233.86	12.78	2.36	1.78
27/2/99	3301.13	3400.19	3215.69	3399.63	13.43	2.48	1.69

Date	Open	High	Low	Close	PE Ratio	PB Ratio	Yield (%)
01/2/99	1468.32	1480.33	1439.06	1439.24	10.71	1.35	2.40
02/2/99	1433.84	1443.83	1417.28	1424.32	10.60	1.33	2.42
03/2/99	1436.22	1445.77	1424.13	1442.21	10.73	1.35	2.39
04/2/99	1447.81	1451.59	1418.54	1423.29	10.59	1.33	2.43
05/2/99	1424.70	1427.40	1407.15	1412.09	10.51	1.32	2.45
08/2/99	1427.93	1438.94	1398.96	1398.96	10.41	1.31	2.47
09/2/99	1399.31	1410.26	1387.35	1409.61	10.49	1.32	2.45
10/2/99	1416.84	1455.22	1414.73	1454.32	10.82	1.36	2.37
11/2/99	1464.89	1477.16	1452.57	1457.68	10.84	1.36	2.37
12/2/99	1461.10	1473.51	1459.67	1468.12	10.92	1.37	2.35
15/2/99	1485.25	1495.21	1461.76	1462.08	10.87	1.37	2.36
16/2/99	1458.69	1478.74	1458.69	1478.42	10.99	1.38	2.34
17/2/99	1478.76	1490.07	1449.94	1477.59	10.98	1.38	2.34
18/2/99	1486.43	1505.37	1477.84	1479.40	11.00	1.38	2.33
19/2/99	1490.64	1496.05	1477.66	1479.45	11.00	1.38	2.33
22/2/99	1484.17	1496.43	1457.40	1458.90	12.50	1.73	1.91
23/2/99	1453.96	1455.00	1433.96	1446.17	12.39	1.71	1.92
24/2/99	1449.50	1457.35	1428.90	1454.17	12.46	1.72	1.91
25/2/99	1451.82	1466.52	1451.20	1454.59	12.46	1.72	1.91
26/2/99	1455.81	1455.81	1433.25	1435.09	12.29	1.70	1.94
27/2/99	1454.14	1507.01	1430.29	1506.95	12.91	1.78	1.85

Date	Open	High	Low	Close	H-L Variation (%)
01/2/99	962.40	968.05	940.15	940.15	2.97
02/2/99	940.10	945.15	924.95	931.20	2.18
03/2/99	948.00	955.55	940.75	952.40	1.57
04/2/99	957.15	958.80	937.50	939.70	2.27
05/2/99	939.65	943.70	930.10	936.30	1.46
08/2/99	937.75	940.90	916.50	916.50	2.66
09/2/99	914.70	924.75	907.45	924.75	1.91
10/2/99	938.80	959.60	935.20	959.45	2.61
11/2/99	966.85	973.70	958.15	960.05	1.62
12/2/99	965.70	972.75	962.35	970.25	1.08
15/2/99	974.10	976.85	954.55	954.55	2.34
16/2/99	952.55	960.25	951.50	958.90	0.92
17/2/99	970.10	978.75	953.10	969.05	2.69
18/2/99	974.15	989.15	968.70	973.45	2.11
19/2/99	971.40	985.40	975.85	976.30	0.98
22/2/99	978.50	978.85	953.60	953.85	2.65
23/2/99	949.30	952.65	938.65	949.65	1.49
24/2/99	959.80	961.40	947.95	957.65	1.42
25/2/99	954.70	962.60	951.90	954.30	1.12
26/2/99	955.40	955.75	938.20	941.20	1.87
27/2/99	947.35	981.55	932.20	981.30	5.29

Date	Open	High	Low	Close	H-L Variation %
01/2/99	1687.85	1705.80	1662.30	1662.30	2.62
02/2/99	1659.05	1660.75	1629.95	1631.50	1.89
03/2/99	1651.20	1674.75	1649.10	1674.15	1.56
04/2/99	1681.05	1684.75	1645.25	1649.80	2.40
05/2/99	1651.95	1659.85	1634.90	1649.70	1.53
08/2/99	1652.60	1661.20	1627.35	1627.35	2.08
09/2/99	1622.95	1648.85	1612.80	1648.85	2.24
10/2/99	1670.30	1701.00	1670.00	1700.85	1.86
11/2/99	1724.25	1729.15	1707.00	1716.55	1.30
12/2/99	1726.70	1741.85	1720.35	1737.75	1.25
15/2/99	1741.50	1752.90	1712.00	1712.00	2.39
16/2/99	1708.20	1739.85	1708.20	1733.00	1.85
17/2/99	1752.65	1788.90	1743.00	1782.35	2.63
18/2/99	1799.90	1810.35	1785.90	1786.75	1.37
19/2/99	1793.85	1797.50	1768.70	1774.10	1.63
22/2/99	1778.20	1778.20	1714.15	1717.15	3.74
23/2/99	1700.75	1708.30	1684.45	1696.75	1.42
24/2/99	1712.50	1716.20	1696.65	1708.85	1.15
25/2/99	1707.05	1707.60	1689.05	1692.70	1.10
26/2/99	1694.85	1694.85	1663.80	1679.55	1.87
27/2/99	1693.30	1773.45	1685.85	1773.45	5.20

Deliveries and Turnover

The daily turnover of Stock Exchange, Mumbai reached a high of Rs. 2040.12 crore on February 27, 1999 and a low of Rs.1052.38 crore on February 25, 1999. At NSEIL the daily turnover was the highest at Rs.2977.54 crore on February 27, 1999, and the lowest at Rs.1439 crore on February 25, 1999. The increase in turnover is a sign of higher trading activity in the month of February 1999.

	BSE						NSE
Date	A	B1	B2	F1	Demat	Total	Total
01-Feb-99	1175.24	133.02	12.24	0.22	5.51	1326.23	1871.30
02-Feb-99	1299.59	110.26	10.13	0.35	16.85	1437.18	2067.79
03-Feb-99	1203.84	126.61	11.53	0.38	4.73	1347.09	2136.92
04-Feb-99	1110.22	195.66	10.32	0.29	3.38	1319.87	2110.30
05-Feb-99	1355.76	105.04	13.26	0.69	2.48	1477.23	2086.46
08-Feb-99	1175.26	135.04	10.76	0.15	8.12	1329.33	1949.78
09-Feb-99	1194.33	184.96	15.30	0.21	3.65	1398.45	2055.32
10-Feb-99	1380.60	163.84	15.13	0.35	9.01	1568.93	2260.89
11-Feb-99	1372.23	175.63	17.06	0.24	13.95	1579.11	2371.53
12-Feb-99	1425.27	145.80	22.15	0.42	2.13	1595.77	2255.57
15-Feb-99	1451.89	172.30	21.95	0.44	5.30	1651.88	2395.97
16-Feb-99	1338.23	242.28	24.33	0.34	0.59	1605.77	2135.53
17-Feb-99	1632.54	266.69	29.25	0.28	0.79	1929.55	2862.52
18-Feb-99	1346.97	179.58	17.22	0.33	2.60	1546.70	2619.88
19-Feb-99	1303.94	132.04	19.33	0.38	5.05	1460.74	1899.44
22-Feb-99	1183.26	179.44	16.93	0.25	13.94	1393.82	2019.29
23-Feb-99	1296.18	200.41	15.21	0.39	2.88	1515.07	2073.63
24-Feb-99	1181.36	144.76	11.37	3.48	5.21	1346.18	1562.79
25-Feb-99	908.71	108.54	12.02	0.34	22.77	1052.38	1438.95
26-Feb-99	1067.09	130.95	13.28	0.24	8.65	1220.21	1847.35
27-Feb-99	1898.12	121.50	16.13	0.07	4.30	2040.12	2977.54

The daily turnover and index of equity moved in the same direction. P/E ratio also witnessed positive association with turnover and movement of index. The high turnover with high index of equity indicate that investors trade both ways more intensively to book profits when index is rising.

Month	Index			Price to Book Ratio		Price to Earnings Ratio (in per cent)		Average Daily Turnover (Rs in crore)		Market-capitalisation (Rs in crore)
	Sensex	Nifty	Natex	Sensex	Natex	Sensex	Natex	NSE	BSE
1998
January	3224.36	963.45	1401.38	2.21	1.46	12.79	11.34	1244	869.03	494224
February	3622.22	1060.75	1568.83	2.48	1.63	14.49	12.84	1189	868.25	554060
March	3892.75	1116.90	1697.14	2.68	1.78	15.65	14.04	1460	1110.00	589816
April	4006.81	1159.35	1760.96	2.76	1.84	16.11	14.46	1634	1404.41	610777
May	3686.39	1063.15	1644.14	2.54	1.72	14.84	13.50	1792	1302.22	591420
June	3250.69	941.65	1427.23	2.22	1.49	12.94	11.63	1343	1022.53	511012
July	3211.31	931.40	1416.67	2.18	1.47	12.69	11.48	1284	923.55	508863
August	2932.85	852.80	1310.60	1.85	1.27	11.13	10.05	1151	909.28	489355
Sept	3102.29	904.95	1379.78	1.89	1.32	11.30	10.29	1422	1256.66	504959
October	2812.49	824.00	1260.78	1.67	1.19	9.83	9.16	1435	1242.82	476609
November	2810.66	817.75	1254.10	2.06	1.18	11.12	9.09	1154	1011.04	476240
December	3055.41	884.25	1359.56	2.24	1.28	12.08	9.89	1565	1213.06	477010
1999
January	3315.57	966.20	1461.52	2.42	1.37	13.10	10.88	2351	1711.35	528896

Monthly Index Movement

Month	Total Turnover (Rs.in crore)		Total Deliveries (Rs.in crore)		Delivery Ratio (In per cent)
	NSE	BSE	NSE	BSE	NSE	BSE
1998
January	23782	17363.57	3816	2312.76	16.05	13.32
February	21607	16476.57	3584	2668.27	16.59	16.19
March	34535	23277.61	6129	3992.72	17.75	17.15
April	29719	26660.81	6520	5095.17	21.94	19.11
May	41243	23433.62	6889	5922.72