The Hindu Business Line : Exit polls, Asian syndrome rattle markets

THE markets tanked on Monday on the back of frenzied selling in the markets. With the latest exit polls pointing towards the possibility of a hung parliament, the investors have gone on panic mode, selling their stocks at a feverish pace in the last two days. The Sensex witnessed a sharp fall of 113 points from its previous close of 5,669 points. In the last two trading sessions, the Sensex has lost 3.4 per cent, owing to the prevailing negative sentiment. The Nifty declined by 35 points to close at 1,769.10 points, down from its previous close of 1,804.45 points.

While index heavyweights bore most of the brunt of the heavy selling, the selling pressure was across the board. A sharp fall in Asian markets coupled with a rise in oil prices, also put pressure on the indices.

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The Sensex began the trading session at 5,628.61 points, a sharp drop from the previous close of 5,669.58 points. It remained in the negative territory throughout the trading session. Although there was buying activity in the final hour of trading, it was not enough to propel the benchmark index upward into the positive territory. Only 5 out of the 30 stocks constituting the index advanced, reflecting the bearish mood that prevailed. The stocks that gained were HDFC Bank, Reliance Energy and BHEL; Housing Development Finance Corporation and Bajaj Auto remaining stable amidst the intense selling. PSU stocks were hit hard by the selling pressure. Oil stocks were also out of favour, with most stocks registering a fall in prices. This comes on the back of rising oil prices. Prominent losers were the stocks of GAIL, BPCL, HPCL and IOC.

Among the automobile stocks, the stocks of Mahindra & Mahindra and Bajaj Auto were the gainers. M&M gained Rs 8 to close at Rs 489.75. This comes on the back of the central bank's approval to raise the limit of overseas holdings in the company. The company's board has raised the limit to 35 per cent from 25 per cent. The stock of Maruti declined by Rs 20 although the company has posted a 59.4 per cent rise in exports.

Banking stocks, which have been the favour of the markets, took a beating on the bourses. The stock of HDFC Bank was one of the few that gained. The stock rose by Rs 9 to close at Rs 384. The stocks of PSU banks slumped, although the stock of Canara Bank emerged as a gainer on Monday.

Stocks belonging to the engineering sector seemed relatively less affected by the bearish sentiment. The stocks of ABB, Bharat Earth Movers, Cummins India, BHEL, and Crompton Greaves were some of the gainers of the day.

The stock of Era Constructions gained Rs 1.8 to close at Rs 38.65. The company has started civil construction of two Super Thermal Power Plants of 500 MW each for National Thermal Power Corporation. The contracts are valued at Rs 430.62 million and Rs 516.89 million respectively.

News that would have ordinarily been greeted positively by the stock markets had no impact on the bears. The stock of I-flex Solutions declined by Rs 13 and closed at Rs 511. This was despite the fact that DAB bank AG, a subsidiary of the second largest bank in Germany, has decided to implement the company's Universal Banking Solution FLEXCUBE. Munjal Showa declined by Rs 7.65 to close at Rs 222.1. This decline was witnessed although the company has recommended a dividend of 7.5 per cent for the year ended March 31, 2004. Infosys Technologies has signed an agreement with Arab National Bank under which the bank would use its product Finacle.

Datamatics Tech, which made its debut on the bourses on Friday, lost ground on Monday. It declined by Rs 9 to close at Rs 155.80.

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