Business

Stocks await poll results

WITH THE exit polls after the third phase indicating that the BJP-led NDA, which had been found slipping in the earlier exit polls, had staged a recovery on Wednesday, across-the-board buying was seen in the stock markets and the Sensex closed in positive territory last week at 5669.58, up 14.49 points over the previous week-end.

Earlier, on Monday the index sustained a loss of 70 points on selling pressure following fears of a hung Parliament which could possibly slow down the disinvestment process and other economic reform plans. Then it went on a three-day gaining streak on active buying. However on Friday, lack of buying support and sustained profit taking at higher levels by foreign and domestic institutions dragged down the Sensex by over 87 points. Additional dampening factors were the possibility of a hike in U.S. interest rates and slowdown in the Chinese economy. Corporate results remained heartening and helped to minimise wild swings in stock prices.

The BSE-30 share sensitive index opened at 5645.86 against the previous weekend close of 5655.09 and fluctuated between 5772.64 and 5506 before closing at 5669.58.

Index-based shares such as Reliance, Infosys, HLL, Tata Motors, HPCL, Dr. Reddy's, HDFC, L&T, ACC, GACL, Hero Honda, MTNL, ONGC, Wipro and Zee Telefilms registered sharp to moderate gains

PSE counters attracted good buying from operators and institutional investors. Banking shares, particularly second-line, attracted renewed buying and recorded marked gains despite selling on the last day. Most IT counters were at the receiving end on the last day following news that after the U.S., European countries may ban outsourcing of strategic or core activities, further affecting the bottomline of Indian companies. Weak advices from Wall Street on the last day following a 13-year high in oil prices to nearly $40 a barrel also generated selling, mainly by foreign institutional investors.

Buying was also seen in auto stocks. M&M gained on reports that it had sold 43 per cent more vehicles in April than a year ago. Among two wheelers, Hero Honda and Bajaj Auto were in demand. Among cement stocks, buying interest was seen in ACC as the company has reported a 93 per cent increase in net profit. Grasim too continued its good run on the bourses. However, the star performer was Birla Corporation. Fertilizer stocks gained ground. The Indian Meteorological Department had earlier said that monsoon rainfall was likely to be "absolutely normal" in 2004. Indo Gulf, Coromandel Fertilizers and Tata Chemicals were once again among the major gainers.

In stock-specific activity, pharma stocks such as Dr. Reddy's, Divis Lab, GlaxoSmithkline and Lupin ended on a positive note. Dr. Reddy's informed that it had acquired Trigenesis Therapeutics, a U.S. based dermatology company, while Divis Laboratories said that its manufacturing facility at Choutuppal near Hyderabad had been okayed by the U.S. FDA.

Datamatics Technologies made a debut on Friday and its share price ended the week at Rs. 164.85 against the issue price of Rs. 110 (Rs. 5 paid up).

Overall, market sentiment remained cautious and retail investors were adopting a wait-and-watch attitude.

Rupee under pressure

Weighed down heavily by political uncertainties, a surge in global crude prices and lingering fears of a cash dollar shortage in the system, the Indian currency continued to reel under severe pressure against the U.S. currency.

The domestic unit ended at 44.66/67 a dollar, sharply lower from the previous weekend level of 44.50/52 after tumbling to a low of 44.99/45.02 during the first day's trading. It plunged by a massive 30 paise on Monday, the largest single session decline in over three years, pulled down by hectic dollar demand amidst a cash dollar shortage scare. However, encouraging advices from the stock market helped to revive confidence in the rupee.

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