Mumbai, March 19: Hopes that Saddam Hussein’s government would be toppled in a rapid-fire war triggered a rebound in markets expecting a strike any time.
Dalal Street appeared to have been happier living with the war, than with the suspense that forced it lie low since January, when disagreement over the way Iraq should be disarmed drove a wedge in the global community.
The Bombay Stock Exchange’s sensex was up 36 points, shadowing a 1.2 per cent gain in Tokyo’s Nikkei. It was followed by a 1 per cent rise in London’s FTSE Eurotop 300 share index and a flat opening in New York.
At home, oil-stoked inflation and fewer software orders abroad are among the most important concerns. Yet, these worries took a backseat as the sensex opened on a firm note at 3103.87, scaled its intra-day high of 3128.83 before ending at 3121.18 against Monday’s close of 3084.91, a gain of 1.18 per cent.
Infosys was up 4 per cent to Rs 4190.05, while Wipro gained a per cent to Rs 1336.05. BPCL was the star performer, rising 3 per cent to Rs 216.05 on reports that bids to appoint merchant bankers for its asset sale will be called. Hotel shares succumbed to fears of less travel.
Overseas, news that US-led forces had moved into the demilitarised zone on the Iraqi-Kuwait border sent stocks jumping and bond prices sliding. Hinting at what could be in store when war begins, some European bourses advanced more than 2 per cent and euro zone government bond yields hit two-month highs after Kuwaiti sources reported the troop movements.
The dollar shot up to a one month high of 119.19 yen and was up at $ 1.0591 versus the euro after hitting two-month highs against the European currency on Tuesday.
Oil prices remained up after four days of steep losses that knocked 15 per cent off the price of a barrel of crude.
Safe haven gold was quoted at $ 339.00/339.75, up from $ 337.50/338.25 an ounce at the New York close. Many investors had been on the sidelines of markets, waiting for war to begin following days in which the slow lifting of uncertainty about war had boosted stocks and the dollar and hit bonds. “This move by US-led forces shows war is only hours away and is removing more of the uncertainty over the timing of conflict from the markets,” said Robert Kerr, a European equity strategist at Bank of America Securities.
The FTSE Eurotop has had a more than 14 per cent run-up from last Wednesday’s six-year closing low. The DJ Euro Stoxx 50 index was up 1.9 per cent. Tokyo’s Nikkei clawed back from 20-year lows earlier today. In the US, The broad Standard and Poor’s 500 index edged up 2 points, or 0.32 per cent, to 869. The tech-laced Nasdaq Composite Index shed 3 points, or 0.23 per cent, to 1,379. The blue-chip Dow Jones industrial average was up 11 points, or 0.14 per cent, to 8,205.