The Hindu Business Line : Sensex sheds 116; PSU shares lead fall

THE statement of the Disinvestment Minister, Mr Arun Shourie, that the Government has identified the people associated with depressing the stock prices in the run-up to the public offer of six PSUs, resulted in a decline in stock prices today as brokers expressed concern over the disinvestment process.

Mr Shourie's statement, which came during the market hours, affected the sentiment as day traders started selling their holdings. In addition, selling by some institutional investors also affected the market.

The market opened firm in the morning but as the day progressed, selling in key index stocks depressed the market and the BSE Sensex closed 116.29 points (2.03 per cent) down at 5,618.15. On the NSE, the S&P CNX Nifty closed at 1786.80, down 34.55 points (1.90 per cent).

The worst affected were PSU shares, with ONGC and GAIL among the major losers. The BSE's PSU Index was down 3.71 per cent, the steepest fall among all the indices in today's trading.

Brokers said that continuous fall in the stock prices over the last few days, especially of PSU stocks, has affected the market sentiment and Mr Shourie's statement further depressed it.

Though none of the brokers were able to figure out the players behind the selling of PSU shares and other stocks, they said that selling has come from players who wanted to subscribe to PSU shares through the public offer that were offered at discount to the market price.

According to the brokers, Thursday would be a very crucial day for the markets as the full impact of the statement would be seen.

"Mr Shourie should not have made such a statement during the market hours, especially at a time when the various PSU offers were open," said a dealer.

The fall in the stock prices was on back of low volumes and the advance-decline ratio was also negative, indicating bearish sentiment.

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