The Telegraph
Since 1st March, 1999
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Stocks capitulate to long-war fears

Mumbai, March 24: Skittish investors jabbed the sales button today after expectations of a short war in Iraq were stifled by mounting resistance to US-led forces.

The Bombay Stock Exchange (BSE) sensex snapped its winning streak that saw it stay positive for much of last week, with a 78-point slide to settle at 3140.36. The shares that had fuelled a rally when the war began were the ones to be dumped by operators scrambling for cover.

The frayed nerves in this morning’s session marked a contrast to the way in which investors shrugged off the impact on the Indian economy when America took the battle into Saddam Hussein’s camp. “The markets thought the war would be over quickly. But it now has fears of a protracted combat,” a broker said.

As reports of the staunch resistance from Iraqi troops and casualties among US troops poured in, the Iraqi President’s television speech declaring a quick victory rattled markets fed on predictions of a fast outcome.

According to unconfirmed reports, Unit Trust of India (UTI) resorted to profit-booking in a clutch of market-swaying shares, which included Reliance and Lever.

Infosys Technologies lost close to 2 per cent to Rs 4,372.15 while Satyam Computers finished lower by over 4 per cent to Rs 201.70 amid fears that a long haul in the battlefield will crimp software orders from the US.

The Reliance share, which plummeted 4 per cent to Rs 282.20, was pounded by concerns that costlier crude would depress the company’s margins; Lever surrendered 4.5 per cent to Rs 155.35 on fears of tepid sales.

The volume of business on BSE was a sparse Rs 904.59 crore.

Brokers said the massacre of 24 Kashmiri Pandits by terrorists also troubled investors trying to figure out the war.

With the earnings session close at hand, investor attention will now be riveted on the profit forecasts that companies reel out to shareholders fishing for clues.

Worries of a long war also weighed down bond markets, where gilt prices fell over a rupee. The benchmark 9.81 per cent 10-year gilt finished sharply lower at Rs 125.55 from Rs 126.65/75 seen last week; alternatively, yields jumped to 6.36 per cent from 6.22 per cent.

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