The Hindu Business Line : Bank, technology stocks lead the plunge

THE modest reversal in stock prices on Wednesday assumed larger proportions on Thursday as stock prices plunged. Technology and bank issues led the decline as Sensex closed the day with a loss of 172 points.

At BSE, 46 stocks, most of them mid-cap or small-cap, recorded losses of more than eight per cent. Large-cap stocks lost as much as mid-cap stocks as suggested by the decline recorded by the various indices.

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Only six stocks of the BSE 100 and 19 stocks of the BSE 200 recorded gains. Prominent among these were Sterling Biotech, Goodlass Nerolac, Cadila Healthcare and Marico Industries, which gained more than two per cent.

Among Sensex stocks, only Bharti Tele-ventures and HDFC stayed firm. The prices of disinvestment-bound stocks such as CMC and IPCL also edged higher. Other stocks such as ONGC, GAIL, Dredging Corporation and IBP recorded declines.

Technology stocks led the rout with the BSE IT Index losing the most at 4.7 per cent. Select banking stocks also lost heavily, with Canara Bank, Indian Overseas Bank and Union Bank of India losing more than five per cent.

Even good news was not enough to spare stocks from losses. The stock of SKF Bearing declined 3.6 per cent despite reporting a 71 per cent rise in profits for the quarter ended December 2003.

Similarly, the inclusion of Mukand in the BSE 500 index could not prevent the stock from shedding five per cent. Stocks such as Onward Technologies and Omax Auto, which announced preferential allotments at a price above the market price, also lost value. Punjab Alkalies fell by five per cent even as the company announced that Punjab State Industries Development Corporation has put its 44 per cent stake on the block.

Denials and clarifications to news reports and rumours also played a part in the price declines.

Tata Finance clarified that is considering the sale of its two-wheeler financing business, reacting to news reports that assets might be sold to ICICI. The stock lost 4.5 per cent.

Maruti Udyog clarified that the plans for the reported new plant at Haryana were in preliminary stages. It suffered a three per cent decline. Titan Industries denied that a buyback was in the offing, yet the stock price fell by 3.7 per cent.

News relating to rights offers also pegged share prices back. The stock of Polyolefins declined by 3.4 per cent in the wake of the company announcement that it is reconsidering the terms of the announced rights offer.

The decision of Amforge Industries to allow conversion of warrants to shares came in the backdrop of the stock losing four per cent in value.

Bank of Baroda shed two per cent even as the bank announced that it would be increasing the interest rate on deposits for senior citizens.

BPL announced the transfer of its alkaline battery business to its subsidiary. The stock lost 3.7 per cent.

TV Today lost four per cent. On Wednesday, Templeton announced that through many of its mutual fund schemes it now holds more than five per cent in the company.

Among stocks that bucked the trend was iGate Technologies, which lost only 0.9 per cent even though Mr Gerhard Watzinger, Head, Sales, GE & Germany, has sold 4,500 shares, almost half of his holdings.

Technology stocks such as Hughes Software and T.Spiritual also bucked the trend to notch gains. Divi's Labs, Tata Infomedia, J&K Bank, Matrix Labs, Gammon India and Britannia Industries firmed up during the day.