Profit taking on Lyons Range

By A Special Correspondent

KOLKATA, AUG. 4. The crisis of the Unit Trust of India continued to have its disturbing influence on the stock market sentiment keeping buying at bay in the early part of last week with prices in virtually all sections suffering a setback on the Calcutta Stock Exchange. The recent pressure in the technology group was again in evidence as most of the shares slipped under fresh selling which met with little resistance.

Subsequently, however, with return of buyers at the trading arena prices improved but failed to make major headway because of profit booking trend that emerged at higher levels.

The indices, however, closed in the positive area because of rise in some of the leading counters of both new and old economy before the profit booking emerged. For instance, the CSE's 40- share index closed at 1726.48 points compared to 1718.22 points.

The earlier sell off was partly influenced by a dip in sentiment following the disclosures in Parliament by a member belonging to a constituent of the ruling NDA implicating the PMO's office with the UTI debacle and persistent demand from the Opposition parties for the resignation of the Finance Minister.

The subsequent offer of resignation by the Prime Minister also had its impact on the market sentiment. But the position soon changed for the better when it was known that under the persuasion of top leaders of BJP and others, the Prime Minister had agreed to withdraw his offer. There was also some selling forthcoming from the beleaguered UTI which was looking for correcting its fund starved state as also from a leading Singapore based fund wiping out virtually all the advantages gained in the wake of the buying witnessed earlier.

The buying support was noted in most of the leading counters including the frontline technology scrips some of which had suffered heavy beatings in the recent past.

This support came following a smart recovery in the Nasdaq which in turn propped up sentiment in the technology sector inducing foreign institutional investors to effect a new sizeable purchases.

The cement counters put on a better look with ACC closing higher at Rs. 143 against Rs. 137.50 in the previous week. Others closing higher included Larsen and Toubro. But ITC, Reliance and select others wound up lower onbalance reflecting renewed selling at higher rates.

The expectation at close is that the market will extend its recovery drive in the coming days in view of the fact that the UTI's problems have been tackled to a considerable extent by providing the necessary funds by some of the leading banks and resumption of repurchases of US- 64 with effect from August 4.

Moreover, sentiment was helped additionally by the report that the Moody's Investor Services, the global rating agency, has maintained that the long term outlook for India continues to remain positive and that there will be no change in the sovereign rating at the moment.

The performance report of some of the leading economy undertakings have also been noted with satisfaction by operators who felt that the market will from now on moving to the positive region.

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