Bearish sentiment on Lyons Range

By A Special Correspondent

CALCUTTA, JUNE 3. Share prices on the Calcutta Stock Exchange ruled distinctly firm in the first two days of last week with active buying aiding most of the key counters in both old and new economy groups pushing the values markedly upwards. The spurt in buying in these shares was propelled by expectations of improved performance by the old economies in the context of forecast about a good monsoon this year.

A good monsoon will no doubt provide a major prop to the economy because of its all round beneficial impact with agriculture being the foremost. A good monsoon will in turn improve prospects of the rural population, which will be able to harvest a higher output helping them to have increased fund capability.

The rural rich is certain to go for enlarged purchases of various industrial products, including those needed for agricultural operations, such as tractors. Thus the demand for a host of industrial products will increase helping the industry too to benefit from the monsoon. This is the prime reason for extending support to the old economy shares, which gained appreciable ground in the early part of the week.

However, there was a change thereafter with share values sliding back under selling pressure, which emanated from Mumbai. The pressure was somewhat pronounced in technology counters some of which suffered the worst as a result. Sentiment in this group was adversely influenced by reports of a weak trend in the U.S. and other bourses as well as a sharp fall in the Nasdaq. This in turn depressed tech prices in Mumbai and elsewhere, despite the fact that there had been favourable news flowing into the markets during the week.

The CSE's 40-share index dropped to close at 1881.56 against 1913.91 on May 25. The tendency at close was downwards with market sentiment remaining markedly bearish.

The leading domestic institution, Unit Trust of India, was a net seller. Though other mutual funds were buyers their offtake was pretty small to have any worthwhile impact on the price line. Foreign institutional investors did effect moderate purchases in the early part of the week but they were also booking profits subsequently which in turn led to renewed profit taking on the part of other buyers.

The predominant mood at close was so bearish that buyers were just not willing to move in to pick up shares, even though many have dipped to levels which were highly attractive.

There was little indication as the week would up that the downslide in prices had been arrested. The prospects of the bearish mood persisting next week therefore looked bright.

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