The Telegraph
Since 1st March, 1999
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PSUs lead market slump

Mumbai, Sept. 17: Shares of public sector companies felt the heat of Supreme Court’s verdict, slumping on bourses today as investors began to size up the hurdles that have now been planted on their sale. As nerves frayed over the impact on selloff, the BSE sensex shed 39.40 points to end at 4235.35 compared with 4274.75 on Tuesday. It shot past 4300, peaking at 4330.85 in pre-noon trading, before being felled by operators and retail investors unwinding their holdings. The broad-based BSE-100 index lost 52.13 points to 2177.57 from its previous finish of 2229.70.

The selling wave buffeted sensex stars Reliance, HLL and ITC. PSU shares slipped into the red on fears that disinvestment was off for now. Disinvestment minister Arun Shourie’s comment that the ruling would affect privatisation as a whole stoked worries. HPCL, BPCL, IBP, IOC, SCI, BEL and Dredging Corp were in the line of fire.

“In our view, a hectic political calendar over the next 12 months poses a big risk to the equity market,” said a research report from Kotak Securities, while acknowledging the long-term potential of share trading.

Local institutions holding huge quantities of PSU stocks were looking for ways to scamper to safety. “We have sold some quantities of HPCL at Rs 400 but we still have a sizeable number,” a fund manager affiliated to a leading local institution said. Many private sector mutual funds were facing a similar predicament.

“We will wait and watch”, an investment banker said. Other fund managers said they were adopting the same strategy. They are watching from the sidelines entering at declines but buying modest amounts. FIIs, too, have slowed their purchases.

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