The Telegraph
Since 1st March, 1999
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Sellers lay a siege to stocks

Mumbai, Sept. 18: Twenty nine of the 30 shares in the sensex sank in a selling wave that swept the index to its lowest ebb in four weeks and stirred worries that the recent convulsions would throttle a fragile recovery.

At a closing quote of 4134.15, the country’s best-known barometer of stock vitality showed just how quickly gains notched up in recent months could melt away. And with it, the notion that markets are out of the woods.

The 101.20-point plunge, a decline of 2.40 per cent, was fuelled by a scramble among local institutions to dump stocks, and the reluctance of foreign funds to step in. National Stock Exchange’s nifty gave up 2.93 per cent.

Overseas investors have been rattled by the Supreme Court ruling that makes legislative sanction a pre-condition for privatising PSUs nationalised by Parliament.

Ironically, HPCL, one of the state-owned firms whose planned sale provoked the lawsuit that led to Tuesday’s verdict, bounced back 2.2 per cent to Rs 335.35 after shedding 16 per cent over the past two days.

“There is a twist in the tale, but it doesn’t matter in the long run. Privatisation has hit a roadblock, but it’s not ended yet. Companies like Shipping Corporation of India were set up under the Companies Act, not under an act of Parliament,” said a dealer affiliated to a key bank.

Local institutions are taking fright at a possible Bareilly court order on Friday that will decide whether several top-guns in the government should be in the dock for their alleged role in the Babri Masjid razing.

The spate of losses in this week has reversed the markets’ course. This happened as end-account settlements in derivatives drew closer and the month-end settlement, due a week later, led operators to square off.

“How long will this correction continue, is the question in everybody’s mind. If it remains as volatile as it is now, it is difficult to say,” says Jignesh Shah, strategist at ASK RJ Investment Services. “Fundamentals look good for the long term, but there is some scope for correction in the short term,” he added.

Among the sensex shares, Reliance lost Rs 11.30 at Rs 394.05, Lever Rs 6.35 at Rs 178.30, Infosys Rs 69.55 at Rs 4245.95, SBI Rs 21.05 at Rs 403.80 and ITC Rs 7.60 at Rs 773.35.

Steel and cement shares, the flavours of the season, crumbled. Reports of declining cement bag prices in the western and southern regions jangled investor nerves. Volumes as Dalal Street stood at 13.5 crore shares, down from Wednesday’s 16.8 crore, while traded volume declined to Rs 2000.11 crore from Rs 2250.53 crore.

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