The Hindu : Bourses await developments in U.S.

Online edition of India's National Newspaper
Sunday, Feb 16, 2003

Business

Business

Bourses await developments in U.S.

By Oommen A. Ninan

MUMBAI FEB. 15. The bourses are cautiously awaiting the U.S. response to the UN's chief weapon inspector Hans Blix's presentation to the UN Security Council. Buying interest seemed restricted to a handful of select stocks on specific developments.

The benchmark Bombay Stock Exchange 30-share sensitive index lost nearly one per cent of its gains in the last three trading sessions. The bourses closed weak under a cloud of uncertainty.

For the week ended February 14, the Sensex dipped by 56.36 points or 1.72 per cent to 3223.41 from 3279.77 in the previous week. On the National Stock Exchange, the S&P CNX Nifty was down by 21.50 points at 1036 against 1057.50.

"The Sensex again turned back from the critical resistance level of 3280, high of 3281.42 last Monday and 3278.79 on Tuesday. The only comfort one can draw is that the Sensex has held above the immediate critical level of 3200," said Saumil Trivedi, Vice-President, Asit C. Mehta Securities. As long as the Sensex manages to stay above 3200, a revival from the 2828 level to stay the course is still possible. However, Mr. Trivedi said, any advance will need to overcome several strong hurdles, namely, levels of 3240, 3280, 3320, 3380 and 3420 before getting into the clear. "Though software exports registered a healthy growth of 28 per cent during April-December 2002 on the back of a strong growth in the information technology enabled services (ITES) segment, sector pivotals closed in the red", said V. R. Srinivasan, a financial consultant. These include Infosys, Mastek and Satyam. However, he said the prospects for the industry closing with around 30 per cent growth in financial year 2003 appear to be bright, backed by strong growth expectations in the ITES segment.

The largest private shipping firm, GE Shipping, has finally taken a decision to pull out of the race for acquiring a controlling stake in Shipping Corporation of India (SCI). This news has come as a dampener to the divestment process of SCI. The bidders list now consists of Essar Shipping, Videocon, BPL and Sterlite. While GE Shipping closed higher, SCI was down nearly 5 per cent on Wednesday last.

"The Indian indices continue to display caution, very much in line with global sentiment," said Mr. Srinivasan. The U.S. markets closed down at four months low, amid jitters over a possible U.S.-led attack on Iraq and heightened security concerns in the U.S. These concerns could get reflected in the Indian markets too in the short term.

However, during the week ended February 14, the U.S. markets were up as compared to the previous week. While the tech-heavy Nasdaq was up 28 points, the Dow Jones ended the week with a gain of 44 points.Things at the macro level also do not seem enthusing. For one, oil prices continue to hold strong, the inflationary effect of which is likely to seep into the economy. Also, the Central Statistical Organisation (CSO) has estimated the gross domestic product (GDP) to grow at a slower pace of 4.4 per cent in 2002-03. Agricultural output is estimated to have shrunk by over 3 per cent during the year (as compared to 5.7 per cent growth in financial year 2002). Nevertheless, valuations for key pivotals among sectors are attractive with a long-term investment horizon.

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