Financial Daily from THE HINDU group of publications
Tuesday, Jul 16, 2002

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Barring PSUs, it's red pointers all over

S. Muralidhar

THE escalation of tensions between India and Pakistan after terrorists struck during the weekend in a village in Jammu and Kashmir killing 27 migrant labourers and the prospects of a poor monsoon this year collectively affected the sentiment in the markets on Monday. Opening on an extremely weak note, the bourses regained some lost ground towards mid-session and yet closed lower than last week's levels.

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Buying interest was subdued. Except for select counters, almost three quarters of all active counters recorded losses during the day's session. The lacklustre sentiment was evident from the lower investments made by foreign institutional investors (FIIs) during July. Net FII investment in equities (till last Friday) was Rs 209.5 crore as against a net investment in equities of Rs 735.60 crore for the full month July 2001.

Reflecting the sentiment, the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) closed at its lowest level yet for the month of July at 3,278.71 points, down 0.82 per cent. Volumes recorded were also low at 9.25 crore shares. In addition to the other contributing factors, the continued decline in the indices of American stock exchanges affected investor appetite for technology stocks. The BSE Teck Index, an index of technology companies, was down 1.98 per cent at 834.42 points.

The sell-off in technology stocks affected the 50-share Nifty Index of the National Stock Exchange (NSE), which has a higher weightage for information technology shares. Amongst the prominent losers in the IT sector were Wipro, which was down by 1.7 per cent at Rs 1,281, Infosys Technologies down Rs 72.50 at Rs 3,248.25 with volumes of 1.68 lakh shares, and Satyam Computer down Rs 3.30 at Rs 238.45, accompanied by trading volumes of 28.14 lakh shares.

Another big factor affecting the sentiment on Monday was the possibility of this year's monsoon being poor. Already a few States have reported lower levels of rainfall and the possibility of crop output being affected has lead to nervousness in the market. The immediate effect of the news was reflected in the fall in the prices of major tractor manufacturers. Escorts share was seen lower at Rs 61.20, down by almost ten per cent, Mahindra & Mahindra, the country's largest tractor manufacturer, was down Rs 2.65 at Rs 108.15 and Punjab Tractor also sought lower levels at Rs 153.20, down almost three per cent.

The Reliance group stocks were all seen stable on Monday, after the news of Mr Dhirubhai Ambani's demise and its effect on Reliance's future was fully discounted by the market. The share prices of the three major group companies - the flagship Reliance Industries, Reliance Petroleum and Reliance Capital - were stagnant at Rs 266, Rs 23.75 and Rs 54 respectively. IPCL, which was recently acquired by Reliance, was marginally higher at Rs 156.25.

Old economy stocks and commodity stocks in aluminium, cement and steel sectors had a morbid day of trading on Monday, with an almost all the counters posting losses. In the steel sector, which has been in the limelight during the last few trading sessions, most counters including that of the bigwigs such as the Steel Authority of India (SAIL), Tata Steel and Essar Steel witnessed profit-booking.

Telecom sector counters were also splashed with red pointers on Monday. However, there was an interesting rally in public sector undertaking (PSU) stocks. The disinvestment euphoria does not seem to have run out and counters such as ONGC, Indian Oil Corporation, National Aluminium Company, Gas Authority of India, Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Dredging Corporation posted handsome gains. Amongst the losers were Bharat Electricals, Container Corporation, CMC, Engineers India, Shipping Corporation, Bharat Earth Movers, Videsh Sanchar Nigam, Steel Authority and Bharat Heavy Electricals.

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Barring PSUs, it's red pointers all over

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