Financial Daily from THE HINDU group of publications
Wednesday, May 29, 2002
Markets - Stock Markets
Sensex sheds 97 points as Musharraf douses sentiment
MUMBAI, May 28
SHARE prices fell sharply on bourses across the country on Tuesday in what appears to be a knee-jerk reaction to the Pakistani President, Mr Pervez Musharraf's speech on Monday.
The benchmark 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed at 3,146.83, down by 96.58 points after reaching an intra-day low of 3,140.38. The CNX Nifty closed lower by 24.55 points at 1,038.20 compared to a previous close of 1,062.70.
Intense selling pressure was witnessed in stocks across the board, including cement, public sector units, auto and pharmaceutical. Dealers said foreign institutional investors (FIIs) sold heavily. "The mood was one of caution and most market players did not take fresh positions," said a dealer.
Says Mr K. Ramchandran, Executive Director, Tata TD Waterhouse, "The market seems to have over-reacted to the Pakistan President, Mr Pervez Musharraf's speech."
The already negative sentiment was aggravated with news of 20 FIIs being served with show-cause notices by the Enforcement Directorate for alleged FERA (Foreign Exchange Regulation Act) violations. Said a dealer, "Tension at the border apart, reports of the Enforcement Directorate identifying select FIIs for FERA violations added to the dampened sentiment. FIIs preferred to adopt a wait-n-watch attitude."
Technology stocks were particularly vulnerable, with the Nasdaq ending lower after frontline companies such as Sun Microsystems recorded disappointing earnings. Index heavyweights such as Infosys Technologies closed at Rs 3,510.55, down Rs 180, Satyam Computers at Rs 215.55, down Rs 16.5 and Wipro at Rs 1,530.85, down Rs 29.
Few counters witnessed buying activity including IDBI (closed at Rs 17.85, up 5.93 per cent), Sesa Goa (closed at Rs 67.60, up 2.35 per cent), BSES Ltd (closed at Rs 220, up 2.25 per cent) and State Bank of India (closed at Rs 229, up 1.78 per cent).
Market players are unclear about the outlook of the stock markets in the ensuing days and are keenly monitoring the day-to-day developments in India and Pakistan.
Cases against FIIs: The Enforcement Directorate had decided to prosecute 20 FIIs for alleged violation of Foreign Exchange Regulation Act (FERA). ED zonal officials confirmed that cases had been registered against the 20 FIIs, which are relatively less known, but declined to comment on the nature of cases registered against them.
``We confirm the developments, but we cannot comment further,'' was the response of a senior official involved in the investigations. ``They have violated FERA norms and we will prosecute them'', he said.
The Esplanade Metropolitan Court here will hear the case of the ED. However, there is no bar on the operations of these FIIs, however, if the cases are proved against them they would be liable financially for these violations.
These FIIs, most of which are US-based, have also violated the norms and guidelines of the Reserve Bank of India.
Market sources said the charges against these FIIs relate to HFCL-First Global case.
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