The Hindu : Business : Buyers stay away from bourses

Online edition of India's National Newspaper
Monday, Aug 16, 2004

Business

Business

Buyers stay away from bourses

RISING CRUDE oil prices and domestic inflation kept the bourses in check as renewed selling emerged in the last three trading sessions of the week ended August 13. Share values declined as there were virtually no buyers as foreign institutional investors and operators adopted a wait and watch attitude. While select cement counters witnessed buying interest other index based stocks declined on fresh selling. Besides, overnight losses in the U.S. markets adversely impacted sentiment.

The market was gripped by fears that the Government may initiate steps to control commodity prices to keep inflation in check. It had climbed to 7.61 per cent for the week ended July 31 after touching a 40-month high of 7.51 per cent in the previous week.

FIIs and local mutual funds also reported net sales during the week. The former were net sellers to the tune of Rs. 130 crores while mutual funds made net sales of Rs. 91 crores.

The Sensex snapped a six-week gaining streak and dropped sharply by 1.81 per cent. After a sharp gain of 441 points or 9.3 per cent in six weekly rallies, the BSE benchmark 30-share index came under pressure and dropped by 94 points to end the week at 5102.02 against the previous weekend's close of 5196.99.

The broadbased BSE-100 index fell back by 50.74 points to end the week at 2722.51.

Public sector stocks were worst hit as sell-off was more pronounced. Buying interest emerged in oil and gas stocks at the fag end of the week as there were reports that the Government was considering a proposal to merge BPCL and HPCL with ONGC. The BSE PSU index dipped by 105.16 points or 3.16 per cent to 3218.03. Meanwhile, India's net oil import bill has jumped by 51 per cent to Rs. 27,135 crores in the first quarter of the current fiscal on the back of a sharp spurt in oil prices. Refinery stocks BPCL, HPCL, Chennai Petroleum, Indian Oil, ONGC, RIL, IBP and others registered sharp falls.

Blue chip stocks such as Tisco, Tata Motors, Satyam Computer, ITC, HDFC, MUL and Dr. Reddy's Lab also dropped sharply.

Tech heavyweights including Infosys, Wipro and Satyam closed in the negative territory.

Cement counters surged in expectation of increased demand after the monsoon which has spread to large areas in the past two weeks.

Steel counters remained slightly subdued on uncertainty over another price hike even though there was broad expectation that considering the expected rise in international prices, Indian companies might resort to a similar step. However, SAIL and the Steel Ministry have indicated that there could be reduction in import duty and discontinuation of DEPB benefit to curb any hike.

The spurt in international oil prices continued to keep auto stocks under pressure. Ashok Leyland was the top loser.

Among pharma sector, Orchid Chemicals went up on reports that the company was considering a foreign currency convertible bonds issue at a premium. Other stocks such as Divi's Lab, FDC, Glenmark, Sun Pharmaceuticals, Lupin, Wockhardt, Cadila Healthcare too witnessed buying support.

On the National Stock Exchange (NSE), the S&P CNX Nifty and the S&P CNX Defty softened by 26.20 points and 24.95 points to close the week at 1607.20 and 1202.50.

In stock specific activity, Bharti Tele-Ventures witnessed selling pressure. A block deal of 68 million shares was done at Rs. 155 per share. There were reports that a draft Cabinet note has effectively disposed of the Finance Minister's move to increase the FDI limit in telecom services from 49 per cent to 74 per cent. The note was prepared by the Department of Telecommunications (DoT) on the basis of suggestions from security agencies.

Rupee looks up

Strong trade inflows and dollar selling by foreign banks on the back of a relatively weak U.S. currency overseas strengthened the Indian currency and offset the impact of soaring global crude oil prices. In choppy trade during the week, the rupee ended at 46.30/31 a dollar, sharply higher from the previous weekend levels of 46.36/37 a dollar, but off intra-week peaks of 46.18/19 struck in early deals on Friday, following global weakness of the dollar on surging oil prices. Despite a late round of hectic dollar short-covering by large offshore oil companies, the rupee finished the week on a positive note, but sentiment remained weak due to the ongoing spurt in international crude oil prices.

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