The Hindu Business Line : Market mood hit by CMP blues

THE much-awaited common minimum programme (CMP) of the Congress-led United Progressive Alliance was given a thumb-down by the stock market as it failed to give any clear direction that the new Government would follow vis-à-vis the economy in general and business in particular.

Various populist measures and a lack of clarity on issues such as the Electricity Act disappointed market players who drove down prices of key stocks. The fall in stock prices was also due to margin calls of various players being triggered leading to heavy selling in the last couple of hours.

At close, the BSE Sensex was down by 223.16 points (4.4 per cent) at 4835.39 and NSE's S&P CNX Nifty fell by 77.65 points (4.8 per cent) to 1,508.75.

The fall in Indian market was on a day when most of the Asian markets closed higher.

The mood in the market was depressed since morning, but statements made by the Finance Minister, Mr P. Chidambaram, during market hours further depressed sentiment leading to heavy selling.

"The much-awaited CMP was the trigger for the sell-off for the market. Uncertainty about the Government's stand on various issues made institutional investors nervous, leading to a sharp fall in the last two hours of trading," said Mr Arun Kejriwal of KRIS Research.

Some brokers said there is widespread concern that populist measures adopted by the new Government would worsen the fiscal deficit.

The mood in the market was so depressed that there was selling across the board. Sectors such as banking, power, IT, FMCG and PSUs were all punished by the market players.

"The CMP has further spoiled the mood of the market," said a dealer with a foreign broking firm. He said some of the FIIs are also unhappy with the CMP and sold index stocks.

The market is also worried about Nifty futures that are trading at a discount of nearly 2 per cent to the spot value, indicating a further downward move.

The bearish mood in the market was also seen from the advance-decline ratio.

On the BSE, out of 1,811 scrips traded, 1,420 declined, 343 advances and 48 remained unchanged. Mr Kejriwal said in the short-term market, would remain bearish with minor rallies providing relief.

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