The Hindu : Bourses await buyers' return

Online edition of India's National Newspaper
Monday, Mar 15, 2004

Business

Business

Bourses await buyers' return

SELLING PRESSURE was conspicuous on the bourses throughout last week and the Sensex (the benchmark 30-share sensitive index of the Bombay Stock Exchange) surrendered most of the gains registered in the earlier week. Despite a modest rally on Friday, the Sensex lost 3.06 per cent (180 points) led by all-round selling in blue chip stocks to end the week at 5700.40 points.

Buying towards the close of the week in index-based shares helped the market end its three-session losing streak. The benchmark index, which had lost 285 points in three trading sessions, recovered on the last day of the week by 50 points.

Index heavyweights such as Reliance, Infosys, Grasim, Tata Motors, HDFC and L&T were mainly responsible for the downslide and 27 out of 30 index-based stocks registered losses. The broad-based BSE-100 index dipped by 59.67 points to end the week at 3004.44 from the previous weekend's close of 3064.11.

On the National Stock Exchange, the S&P Nifty lost 55.50 points (2.9 per cent) to close at 1812.20. Fresh buying was not much in evidence and retail investors opted to book profits and divert funds to the primary market. Operators and institutions also resorted to selling ahead of the fiscal year-end. The setback in U.S. markets also affected the sentiment.

However, select pharma stocks posted modest gains in expectation of good corporate numbers for the year. Stocks of public sector enterprises, especially oil and refinery stocks, exhibited a weak trend at the beginning of the week on reports that the subscriptions to the book-built issues was over counted by the Bombay Stock Exchange due to software glitches. This led to fears among investors that the demand for shares in the secondary market after the public offer could be lower than expected.

Software counters witnessed a further downslide following over the uncertainties over the outsourcing issue in the U.S. However, the response to the Government's disinvestment programme, especially to the ONGC equity offering in the primary market, was good. It is expected that the funds locked in the primary market may find their way back to the secondary market after a fortnight. However, oil and gas stocks such as HPCL, IOC and BPCL recovered at the end of the session. Cement, metal and auto stocks somehow attracted buying.

Intra-day volatility however continues though the Sensex has managed to stay above the crucial support level of 5550 points.

Shares of FMCG major Hindustan Lever bounced back on institutional buying after the recent fall caused by the eruption of a price war in the detergent segment sparked by Procter & Gamble. Foreign institutional investors (FIIs) effected net purchases to the tune of Rs. 665.40 crores in four trading sessions from March 8 to 11.

As for stock specific movement, shares of GlaxoSmithkline Pharmaceutical (GSK Pharma) and Burroughs Wellcome surged after the two companies announced that their boards would consider a proposal for merger of the two companies. Shares of Burroughs Wellcome witnessed a much stiffer rise than those of GSK Pharma on expectations of a favourable merger ratio for the former.

Stocks of Hero Honda dipped by 11 per cent to Rs. 474 on rumours that Honda's 100 per cent subsidiary Honda Motorcycles & Scooter India (HMSIL) was likely to come out with a new bike.

Shares of Unichem, Alembic, Wockhardt Pharma and Berger Paints registered a rally, as these stocks are available at cum-bonus prices ahead of the record date for bonus. Shares of MICO slipped despite the announcement of good fourth quarter results.

Shares of Mahindra & Mahindra recovered from lower levels after the company announced a hike in prices of its utility vehicles.

It is expected that speculators and institutions may step up their activity in the coming weeks as corporates gear up to announce their fourth quarter and annual results next month.

Rupee remains firm

The rupee firmed up against the dollar at the interbank foreign exchange market during the week supported by healthy trade and capital inflows. The domestic unit ended at 45.2550/26 a dollar, sharply higher from previous weekend levels of 45.2875/2925 on the back of strong dollar inflows.

Interest rates easy

Interest rates were lower last week, due to abundant liquidity. The 10-year government security was traded at 5.18 per cent and the five-year security at 4.87 per cent. The year on year inflation moved down to 5.32 per cent as on February 28.

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