The Hindu : Business : Two-way price moves in stocks

Online edition of India's National Newspaper
Monday, Jun 14, 2004

Business

Business

Two-way price moves in stocks

THE STOCK markets turned subdued after showing some vigorous signs of recovery in early trading sessions last week. The handsome gains in the first three sessions were wiped out and the market ended in the negative territory on the emergence of selling pressure on Friday. Investors and retailers adopted a wait and watch attitude ahead of the Union Budget, now expected to be presented to Parliament in the first week of July.

Friday witnessed a heavy sell off and there were virtually no takers across all sectors on reports of a likely cut in customs duties on crude oil and petroleum products. Refinery stocks were on the forefront of the downtrend. However, stocks of Tata group companies were in great demand after the announcement of Tata Consultancy Services filing its red herring prospectus for its initial public offering.

The BSE benchmark 30-share index which had risen to the intra-week high of 5000.39, failed to retain the higher levels following late sell-off and ended the week at 4832.71 against the previous weekend close of 4889, for a net loss of 56.29 points.

The FIIs, which have slowed down their activity, made net investments of a meagre Rs. 207 crores in the first four sessions of the week.

Bank stocks came under selling pressure after a foreign brokerage downgraded the financial sector. Steel stocks remained weak as reports that international prices might come down even as domestic manufacturers were planning to submit a suggestion for stabilising prices.

Heavyweights such as Infosys, Satyam Computer, Wipro, HLL, Grasim, BHEL, ICICI Bank, SBI, Tisco and Zee Telefilms registered sharp losses on selling pressure.

Among power stocks, Reliance Energy were under selling pressure after the company announced that it had set its maximum buyback price at Rs. 525 per share. The buyback would be through the open market route.

On the National Stock Exchange (NSE), the S&P CNX Nifty and S&P CNX Defty eased by 12.55 points and 4.85 points to finish at 1508.45 and 1159.95 against the previous weekend close of 1521.10 and 1164.80 respectively. During the week, the volume on the BSE and the NSE was sharply lower at Rs. 7,941 crores and Rs. 18,278 crores against Rs. 9,262 crores and Rs. 20,510 crores respectively. Analysts expect the range-bound movement to continue in the short-term till the budget provides a clear direction with regard to reforms and economic policies.

Rupee declines

The Indian currency lost ground against the U.S. dollar after hitting the one-month peak midweek. There was heavy dollar short-covering in the last two sessions following a resurgent dollar overseas, amidst expectations of a rise in global interest rates.

The initial firmness of the rupee was on the back of a spurt in trade and foreign fund inflows.

In fairly active trading, the rupee ended at 45.15/16 a dollar, lower from the previous weekend finish of 45.12/13, following an early surge past the $45 mark to a high of 44.92/94 in intraday deals on June 9, before ending at the one-month peak of 45.0250/0350.

A resurgent dollar overseas fuelled fresh dollar demand from corporates and importers while the firm global oil prices induced large offshore oil companies to cover short-dollar positions.

Interest rates rise

Interest rates moved up marginally last week on fears of higher inflation. The year-on-year inflation moved up to 5.03 per cent on May 29. The ten year government security was traded at 5.32 per cent and the five year security at 5.05 per cent.

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