The Telegraph
Since 1st March, 1999
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Oil duty cut fear stalks market

Mumbai, June 11: Stocks went into a tailspin today as the market was overrun by fears that a cut in customs duty on oil would hit refiners and a planned TCS public offer would suck out money from existing software shares.

The Bombay Stock Exchange (BSE) sensex shed 111.93 points as investors dumped refinery, technology and banking stocks in a session that saw unusually low volumes. Observers say markets will be range-bound till the budget, punctuated by slides of the kind seen today. Many investors prefer to adopt a wait-and-watch stance till the government shows its cards on the economy.

Reports that the government would bring down customs duties on crude oil and petro products pummelled refinery stocks. Domestic refining companies, which will lose some of the protection they enjoy because of high duties, will be scalded if the cut takes place.

Reliance Industries (RIL), which owns the biggest oil refinery in this part of the world, was bruised —its share shed Rs 15.90 to close at Rs 431.70. Mangalore Refinery and Petrochemicals Ltd, also perceived to be a loser from the move, fell around 4 per cent to Rs 42.15; HPCL was weaker by Rs 9.35 to Rs 347.85, while BPCL dipped by more than 2 per cent to close at Rs 352.95.

Bank shares also hit the skids with SBI, ICICI Bank, Punjab National Bank and UTI Bank being the big losers.

The 30-share index plummeted to an intra-day low of 4823.10 in the last hour, before closing at 4832.71 against Thursday’s level of 4944.64, a loss of 2.26 per cent.

The volume of business was low at Rs 1,464.43 crore. Maruti Udyog was the top-traded scrip with a turnover of Rs 142.57 crore, followed by Tata Power (Rs 106.60 crore), Tisco (Rs 100.08 crore), ONGC (Rs 96.32 crore) and Reliance (Rs 95.82 crore).

BSE indices other than the sensex were awash in red ink, too. The BSE-Teck skidded 33.48 points to 1192.88, the PSU index gave up 80 points to 3137.58 and the bankex surrendered around 89 points. Indices tracking the shares of infotech firms, FMCG majors, capital goods makers, consumer-durable entities and healthcare companies tumbled.

TCS factor

Call it the impact of the proposed IPO of Tata Consultancy Services (TCS), technology shares felt the heat on fears that cash already invested in existing technology companies would be pumped into the Tata firm.

Infosys dropped to Rs 5,108.25, Wipro slipped Rs 1,479.50 and Satyam Computer Services fell to Rs 300.90.

TCS had, on Thursday, filed the red-herring prospectus for its IPO, which is expected to raise Rs 5000-6000 crore, making it the largest public issue by an Indian private firm.

The TCS offer plan boosted shares of most Tata group companies, which are expected to benefit from the issue, early in the day. However, they were caught in the market slide later and finished way below their intra-day peaks.

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