The Telegraph
Since 1st March, 1999
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New-issue stampede tramples old

Mumbai, Feb. 19: Money gushed out of shares today in a torrent that inundated markets with losses they have not seen in over three years. The sensex sunk 172 points to close well below the crucial 6,000-mark, at 5855.

Big investors sold their shares to unlock funds needed to join the public-offer party beginning tomorrow.

Reliance Industries, Hindustan Lever and Infosys bore the brunt of investors’ rush to make a quick profit. Those who dumped shares today are expected to use the money to buy the stocks of ONGC, Gail, CMC, IPCL, IBP, Dredging Corp and several other companies that have queued up to raise funds from the public.

“We haven’t seen such action in the primary markets in five years,” said Ajit Sanghvi of MSS Securities, a prominent institutional brokerage with BSE. “What we haven’t done in five years, we are trying to do in a month,” he added. He was referring to the slew of issues expected to breathe life into a primary market that had been in slumber for many years.

Led by Infosys, the day saw several top-rung infotech stocks crashing. Joining them in the meltdown was Reliance Industries, the share with the highest weightage on the BSE, and FMCG major Lever.

Reliance shed Rs 23.10 at Rs 581.30, Infosys tumbled by Rs 245.00 to Rs 5095.75, Satyam Computer by Rs 21.80 to Rs 312.80 and Hindustan Lever by Rs 5.55 to Rs 182.05.

Rumours were rife that mutual funds and foreign institutional investors (FIIs) sold heavily in these shares. The names of Morgan Stanley, Goldman Sachs and Government of Singapore as the big sellers were in the air.

“A good amount of selling was witnessed today,” said Venkatesh Iyer of R. K. Chari Stock Broking, another institutional broker on BSE. “It was more of a technical correction ahead of the days when the IPO-swamped primary markets will be the centre of attention.”

Venkatesh said he expects offers for the six companies planning a trip to the market, to sail through comfortably as fund-flush banks appear more than willing to lend to those who want to invest in the issues.

The 30-share index opened at 6041.36, but floundered to the day’s low at 5845.07 before closing at 5855.10 against Wednesday’s close of 6027.02, a fall of 171.92 points or 2.85 per cent. The broad-based BSE-100 also nose-dived 91.17 points to 3037.15 from 3128.32 on Wednesday.

Twenty eight shares in the BSE A group suffered sharp to moderate losses; only 14 closed with gains. Volumes jumped to Rs 3,121.75 crore from Rs 2,573.93 crore.

Among the other major losers was Tata Power, which lost Rs 18.45 to Rs 374.50, Wipro by Rs 82.90 to Rs 1,505.95, BPCL by Rs 10.65 to Rs 476.30, BEL by Rs 15.90 to Rs 557.95 and Bharat Earth Movers by Rs 10.55 to Rs 185.70.

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