Business

Relentless bear pressure on bourses

STOCKS CAME under persistent selling pressure across a wide front and the market remained under bear grip last week. Retail investors along with domestic funds and major corporates were believed to have made across-the-board sales to book profits ahead of the end of the financial year. Individual investors needed the funds to make advance tax payments while mutual funds had to meet redemption pressures.

Operators ignored positive reports about industrial growth announced during the week. Even increased FII inflows during the first four sessions, despite a marginal decline in major overseas markets, had no impact on overall sentiment.

FIIs were largely engaged in hedging activity and made net purchases of Rs. 559 crores in the first four sessions.

Heavyweights such as Reliance, Hindustan Lever, Tisco, Tata Motors, ITC, L&T, MTNL, Grasim, GACL, SBI, Bajaj Auto, BHEL and Cipla recorded sharp falls on heavy sell-off. FMCG major HLL was the worst hit. Only on Friday IT stocks led a modest recovery on expectations of substantial growth in operating margins of IT majors such as Infosys Technologies, Satyam Computers and Wipro.

In a volatile week, the Sensex closed lower by another 4.51 per cent and ended the week at a 14-week low of 5443.44 despite positive inflows from foreign institutional investors. In the week under review, the BSE 30-share index witnessed wide fluctuations between 5764.20 and 5386.62 and closed at 5443.44 against the previous week-end close of 5700.40, a net fall of 256.96 points. The BSE-100 index dropped by 116.47 points to close at 2887.97.

The Sensex touched the year's low of 5,386.62 in intra-day trades on Friday. It had lost about 13 per cent from its all-time high of 6,249.60 touched on January 9, 2004.

All the indices including the BSE sectoral indices showed sharp falls. The BSE PSU index fell by 87.85 points to 3804.02, Bankex by 98.87 points to 2779.37, BSE CG index by 104.85 points to 2178.95, BSE Capital Goods index by 60.91 points to 918.11, BSE healthcare index by 127.71 points to 2221.55 and BSE FMCG index by 53.37 points to 930.13. The volume of business on the BSE and the NSE for the week was relatively low at Rs. 11,855 crores and Rs. 24,229 crores compared to the earlier week's turnover of Rs. 13,038 crores and Rs. 26,683 crores respectively.

Automobile stocks such as Tata Motors, Hero Honda, Bajaj auto, Mahindra & Mahindra, Maruti Udyog and TVS Motors finished lower.

Among power stocks, Tata Power, BHEL and Reliance Energy closed lower. Among pharma stocks, Burroughs Wellcome and GlaxoSmithKline Pharma declined after announcement of the merger ratio of 5:7. Cipla ended lower on news of a stock split under consideration. Others such as Divi's Laboratories, Lupin Lab, Alembic, Astra IDL, IPCA Laboratories, Orchid Chemicals, Natco Pharma, Aurobindo Pharma, Kopran, Shasun Chemicals, J.B. Chemicals, and Sun Pharmaceuticals ended lower.

Sugar stocks surged on reports that production in the major sugar belt, Maharashtra, would fall further in the 2004-05 season and could send sugar prices soaring. On the other hand, cement stocks displayed weakness on the back of price cuts in Gujarat.

Following mounting pressure from the State Government, cement companies have been forced to cut prices. Pivotals such as ACC, L & T, Grasim and Gujarat Ambuja continued to fall on reports of pressure to cut back prices in Gujarat.

A large number of PSE stocks ended in negative category. ONGC rose during the week as buying resumed in the counter after the public issue.

Major gainers of the week included Federal Bank, Indian Overseas Bank, Punjab National Bank, Karnataka Bank, Bombay Dyeing and Infosys Technologies while major losers included Mirc Electronics, Punjab Communications, Abbot Labs, Videocon International and Gujarat Industrial Power.

A section of the marketmen is confident of an early end to the downward trend while others are of the view that the current trend would continue till the elections are over. However, the undertone remains cautious as the March series futures contracts expire on March 25.

Rupee at new peak

The Indian currency spurted to a 43-1/2-month peak against the U.S. currency, buoyed by robust trade and foreign capital inflows even as the central bank made a feeble attempt to contain its gains through dollar purchases by State-run banks.

In moderately active trade during the week, the rupee ended at 45.16/17 a dollar, sharply higher from the previous weekend levels of 45.2550/2600.

Piercing the key psychological barrier of 45.23 defended strongly by the central bank, the rupee breached the 45.20 a dollar level and hit a high of 45.16/17 at the close of trade on Friday.

Interest rates easy

Interest rates fell marginally last week. The 10-year Government security was traded at 5.15 per cent and the five year security at 4.80 per cent. The year-on-year inflation moved down below the 5 per cent mark to 4.91 per cent as on March 6.

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