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April-June M-cap declines 5.83 pc — Finance, auto stocks buck the trend

Ambarish Mukherjee
Nithya Subramanian

NEW DELHI, June 30

THE first quarter of the current financial year seems to have been rather dull for the capital market as a whole.

While the total market capitalisation of the market barometer 30-share BSE Sensex went down by Rs 16,195.78 crore from Rs 2,77,572.79 crore on April 1, 2002, to Rs 2,61,377.01 crore when the market closed after the last trading session of quarter on Friday evening, recording a 5.83 per cent net fall during the quarter, it has been the automobile industry and the financial sector that have actually moved against the trend.

An analysis of the sector-wise capitalisation of the Sensex shares shows that but for the extraordinary performance of automobile and financial sector stocks, the fall would have been much sharper, spearheaded by the FMCG and followed by the ICE sectors.

The total capitalisation of the four major FMCG companies - HLL, ITC, Nestle and Colgate - went down by 11.90 per cent from Rs 74,101.15 crore on April 1, 2002 to Rs 65,279.27 crore on June 28, 2002.

During the same period, five major ICE sector stocks which form part of the Sensex went down from Rs 55,254.74 crore to Rs 49,620.56 crore, a decline of 9.70 per cent.

Pharmaceuticals also did badly. The total market capitalisation of the pharma stocks in the Sensex went down by 5.79 per cent during the quarter from Rs 27,432.84 crore to Rs 25,842.46 crore.

Simultaneously, core sector stocks also fared badly during the period. The 11 core sector old economy stocks which enjoy the maximum weigtage in the index, fell by Rs 5051.52 crore from Rs 85,999.55 crore at the beginning of the quarter to finish it off at Rs 80,948 crore, marking a 5.87 per cent fall. But for the steel sector, represented by Tisco in the Sensex, which moved against the trend and increased its market capitalisation during the last three months from Rs 3,602.25 crore to Rs 5,172.37 crore, posting a gain of 43.58 per cent, the decline in the core sector would have been much sharper.

On the other hand, the financial sector has posted spectacular gains during the period; ditto for the automobile sector.

While the market capitalisation of the two financial stocks of the Sensex, namely SBI and ICICI went up by 21.85 per cent during the quarter from Rs 17,299.88 crore to Rs 21,080.55 crore, the automobile stocks moved up by 6.41 per cent from Rs 17,484.63 crore to Rs 18,606.04 crore.

According to analysts, however, there is a direct relation between the automobile sector and finance sector.

Substantial increase in auto financing has led to overall growth in these two sectors while the pharma sector is expected to post some gains in the coming days.

While FMCG and ICE sectors could be expected to remain sluggish, some of the old economy stocks could be better valued and corrections were likely in the short term, analysts said.

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