Market mood remains bearish

By Our Special Correspondent

MUMBAI, MARCH 9. The stock markets in the country witnessed another gloomy Friday after last week's crash of 176 points. Today the Sensex dipped by 175 points due to reports that some brokers on the Calcutta Stock Exchange (CSE) failed to make settlement payments.

``The problems on the exchange are more of a technical factor at play rather than any fundamentals,'' said Mr. Nitin Raheja, Fund Manager, Sun F & C, a leading Foreign Institutional Investor (FIIs).

The payment failure aroused concern among the market participants that the problem could spread to other exchanges and develop into a credit crisis. Further, the mood in the market remained bearish amid negative news all around. However, there was no panic selling.

The benchmark Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) closed below 3900 level today at 3881. The Sensex opened below the 4000-level at 3986.82, declined to an intra-day low of 3821.59 and closed at 3881.96 indicating a net loss of 174.98 points from its previous close of 4056.94. The Sensex lost almost more that 5 per cent during the intra-day trade. The Sensex is 1446.83 points lower compared to a 52-week high on March 9, 2000.

Nothing seems to be going right for the market and high intra-day volatility has scared away the investors. Volumes continued to remain low on the bourses as a consequence of a ban on short sales. Moreover, the volume was every thin and there was not much of institutional activity. However, there was modest recovery at the end of the trade after the CSE Executive Director said that the crisis was only due to a delay in payments and there was no default.

Stocks lost across the board with almost everyone rushing to unwind long positions on the last day of the settlement on the BSE. Technology stocks, which were losing steam following profit warning from the NIIT, lost further ground after a fresh profit warning by Intel on Thursday which hit the Nasdaq. Operators booked profit in old economy stocks to pay up for heavy losses in Technology, Media and Telecom (TMT) stocks. Automobile and Cement stocks, which withstood earlier crash, also fell today.

However, settlement on the BSE ended on a subdued note. The BSE today stated that there was no payment problem on the Exchange. In a press statement, it said it had successfully completed the pay-in of Settlement in respect of A, B1, B2, C and Z Group Securities for the period ended March 2, 2001 on Thursday. Accordingly, the stock exchange authorities declared pay-out of the settlement on Friday, March 9, in accordance with the schedule.

What next? The Budget has been good and the new economy stocks have been brought down to levels which represent value. The economy should get the required thrust because of the Budget and the old economy also subsequently do well.

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