The Hindu Business Line : PSU stocks lead market fall

THE fall in stock prices continues unabated with the lack of any positive triggers to cheer the market. Weak Asian market also added to the sluggish trend. PSU scrips, continuing to stagger from the CMP effect, bore the brunt of the market sentiments on Monday. In fact, most of the recently disinvested PSUs are quoting below the IPO price.

The Sensex shed nearly 140 points to open below the 4700 mark. Though it did recover subsequently, the key index shaved off 1.57 per cent to close at 4760, down 76 points from Friday's close. The market operated on a narrow breath with only 420 scrips advancing, while 72 per cent of scrips declined during today's trading.

The Nifty followed a similar pattern, losing 1.67 per cent and 25 points, to close at 1483.60. Index heavyweights Reliance, ONGC, SBI, Tata Motors all closed in the red. Cement scrips ACC and Gujarat Ambuja lost 4.97 per cent and 2.20 per cent respectively, though Grasim bucked the negative trend to close up 2.12 per cent.

Trading rally was witnessed largely only on technology scrips. Strengthening dollar and value buying helped prop the BSETECk index up by 1.36 per cent.

The excitement and enthusiasm the markets witnessed over the PSU disinvestments earlier this year have been reduced to a painful whimper. ONGC, the biggest public offer in the history of Indian primary market, closed at Rs 625.45 on BSE, a discount of 16.60 per cent to the offer price. Similarly, GAIL is trading at a discount of 19.38 per cent at Rs 157.20, IPCL is also down by 17.41 per cent at Rs 140.40. The biggest loser is IBP, which is down by 28.87 per cent at Rs 441 compared to the issue price.

In fact, Dredging Corporation is the only stock, which is trading at a marginal discount of 1.5 per cent at Rs 394 compared to the offer price.

``Selling in these PSUs is not due to the Government saying no the privatisation or disinvestment, but due to the overall sentiment of the market,'' said a broker.

However, a dealer with a foreign broking firm said "selling in PSUs like ONGC, GAIL and others is mainly from FIIs, which are reducing their exposure in emerging market including India". FIIs had registered major interest in these scrips at the time of their public offer and their exiting these is the reason for the huge falls, he said.

The six PSUs in which government diluted its stake are— ONGC (offer price Rs 750), GAIL (Rs 195), IPCL (Rs 170), IBP (Rs 620), CMC (Rs 485) and Dredging Corporation (Rs 400).

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