Financial Daily from THE HINDU group of publications
Tuesday, May 23, 2006
Financial Daily from THE HINDU group of publications Tuesday, May 23, 2006 |
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Stock Markets Markets - Stock Markets Shanthi Venkataraman
Investors who experienced the bloodbath in the markets on May 17, 2004, must have had an overwhelming sense of déjà vu, as they watched much of the gains that they had made in recent months wash away in the first few hours of trading on Monday. But investors may not have had it nearly as bad this time around, as the markets staged a much stronger recovery. During the day's trading, while 75 per cent of the Nifty stocks declined more than 10 per cent in the initial hours of trading, only four stocks out of the fifty, closed below that level by the end of the trading session. In contrast, on May 17, investors were deeper in the red by the end of the trading session; about half the stocks on the Nifty had witnessed a drop of more than 10 per cent from the previous day's close. Even though the fall was across-the-board on May 17 as well, the market theme was clear. With a new Government taking on the reins, policy-related stocks were the initial targets. The first stocks that came under attack in the initial hours of trading were potential disinvestments candidates, such as BPCL, HPCL and National Aluminium. Several PSU stocks bore the brunt of the selling pressure. Capital goods /engineering stocks also took a beating on uncertainties regarding Government spending on infrastructure projects. This time around, with a confluence of factors triggering the market correction, there really was no method in the selling madness. The metals meltdown and probable interest rate hikes triggered the selling of metal and auto stocks in the first hour of trading. But the likes of Gujarat Ambuja Cement, Dabur, Tata Power and Glaxo Pharma came under the hammer as well, losing more than 20 per cent falling to the day's low. These were also the stocks that made a swift recovery in the second half of the trading session. The inexplicable drop in prices of these stocks could have possibly triggered a round of value buying.
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