Selling pressure on Lyons Range

By A Special Correspondent

KOLKATA, APRIL 1. The Calcutta Stock Exchange and other major bourses faced yet another storm which blew over them on the final day of last week sending share prices reeling under the lead of the technology scrips which posted appreciable losses because of heavy selling pressure. The new depression in the market stemmed from a host of factors - fraudulent use of funds from a co- operative bank by a Mumbai bull operator, Ketan Parekh, fears of a major payment crisis at Mumbai and reports that the Finance Ministry is suspecting involvement of Stock Holding Corporation in the bear hammering that took place in stock markets on March 1.

Simultaneously, the president, vice president and six other members of the managing committee of the Calcutta Stock Exchange (CSE) tendered their resignations. A press release issued by the CSE in this connection says that the step has been taken to facilitate a proposal for demutualisation mooted by the Securities and Exchange Board of India for the stock exchanges.

Earlier, the CSE authorities had notified that the pay in connected with the settlement No. 151 was completed smoothly. The earlier settlements pay in and pay out have also been effected though the CSE was forced to dig deep into the Trade Guarantee Fund to cover a fair portion of the short fall of brokers in respect of the pay out.

The week witnessed a mild change for the better with share prices, especially the software counters, assuming a hardening trend reflecting support forthcoming attracted by prevailing exceptionally low price levels. But the whole atmosphere in the market horizon underwent a sea change on Friday because of the above noted development under impact of which the sentiment of the market turned markedly weak. Share prices in all sections suffered a slide and the close showed losses in most of the counters despite the earlier modest recovery.

Mirroring the price movement, the sensex crashed to close at 3604.38 against 3799.68 to which it had rallied in the course of trading earlier in the week. This compares with the previous week's 3640.11 points. The CSE's 40-share index closed the week at 1885.43 points against 1902.61 points at the end of the previous week and the closing undertone was rather gloomy with operators feeling concerned over the prospects of the market ever staging a recovery in the near future.

The recovery around mid-week had in fact thrown some hope that the crisis in Calcutta having ended, chances of an early recovery emerging in the market will be bright. But this proved to be a false hope as events have shown subsequently throwing the market into total disarray. The pressure on software shares in which the broker Ketan Parekh had commitments were the worst hit with Zee Telefilms down to Rs. 121.10 against previous week's Rs. 129.70 and the highest of Rs. 136.40. Himachal Futuristic, another favourite of this bull operator slumped to close at Rs. 158.10 compared to Rs. 184.20 while Global Telesystem dipped to Rs. 163 from Rs. 198.60 and DSQ Software to Rs. 98.50 from Rs. 114.10.

In the prevailing nervousness in the market, the majority closed below the levels prevailing at the end of the previous week. Hindustan Lever which had shot in the limelight and was traded as high as Rs. 224.50 also slipped to close at Rs. 219.90 (Rs. 215.50) while ITC settled at Rs. 808.50 after deals at Rs. 833.90 (Rs. 806.50).

The payment crisis at the CSE for three successive settlements ending with settlement No.150 which forced the authorities to draw upon the Trade Guarantee Fund besides selling bulk of shares held by them towards margin deposits on behalf of the defaulting members has meanwhile brought peculiar problems to the CSE. In addition to the over all effect on confidence among the market operators, there was a pronounced apathy on the part of investors, especially small and medium investors, to pick up shares from the market. The result was a substantial fall in the volume of business.

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Section  : Business
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