The Telegraph
Since 1st March, 1999
Email This Page
Markets lie low in poll hangover

Mumbai, May 3: The rupee plunged and stocks swooned as markets were gripped by renewed jitters of a fractured mandate ahead of Wednesday’s polls in key states.

The sensex shed 70 points to close at 5584.99, while the rupee settled ominously close to the 45-mark against the dollar in a dramatic loss of 30 paise over its last finish.

Financial markets have chafed at the prospect of a hung House ever since exit polls after the first two phases of polling came out with the unsettling forecasts.

The only comfort in the hail of bleak tidings has been the trust that foreign institutional investors (FIIs) renewed — by buying more shares than they sold in the week ended April 30. Figures for the week before showed their faith shaken by signs of political instability.

In the last four trading sessions of April, they were net buyers to the tune of Rs 30 crore — modest by their standards, but enough to warm the hearts of many who see them as the drivers of the bull market since April last year.

Experts in the forex and equity markets fear that the pace of reforms will slow down if a splintered Parliament — a ghost haunting the bourses for two weeks — is thrown up after the ballots are counted on May 13.

The greenback rebounded dramatically. Those in the forex dealing rooms said there was a rush to cover dollar positions amid growing fears of thinning FII flows.

This, coupled with a cash-dollar crunch, sent the rupee tumbling to 44.97-45.01. The currency did recover some ground later on dollar-selling intervention by public sector banks, but still fell to 44.83 — the lowest close since March 23, when it had slumped to 44.87.

Equity markets were just as volatile. The BSE sensitive index opened lower at 5645.86, firmed up a little in the afternoon before closing at a month’s low of 5655.09. Earlier, it had tested an intra-day low of 5506, a whopping 149-point loss over the previous finish.

While selling was spread largely across the board, it was shares of public sector undertakings and banks that were pounded most heavily. While PSU shares were clobbered over fears that a hung Parliament could impede plans of divestment, bank shares continued to be under pressure over the impact of an Reserve Bank (RBI) directive on dividend distribution.

The volume of business on Dalal Street was Rs 2,152.97 crore, up from Rs 1,976.62 crore on Friday. Maruti was the top-traded share with a turnover of Rs 222.91 crore, followed by Reliance (Rs 208.85 crore), Tisco (Rs 179.86 crore), SBI (Rs 167.72 crore) and ONGC (Rs 102.22 crore).

Email This Page