The Telegraph
Since 1st March, 1999
Email This Page
Stock rally cap-sizes
- Markets balk at plan to control commodity prices; Chidambaram sees cool-off next month

Mumbai, Aug. 11: Markets cringed at the idea of commodity price caps being used as a weapon to battle inflation, signalling to the government that the remedy would be worse than the disease. The sensex plunged 77 points as investors dumped shares of firms that could be hit if the plan actually takes off from the drawing board.

The sensex slide snapped a two-day winning streak on the bourses as steel, cement and petrochemicals stocks bore the brunt of investor jitters over possible price controls.

“The correction had to happen. The market had thumbed its nose at the runaway inflation rate of 7.51 per cent and rising oil prices. It’s difficult to ignore all this,” said a broker affiliated to a Mumbai-based institution.

Oil prices have shot past $45 a barrel and the US Fed continued its reversal of a soft-interest rate regime by setting the target rate at 1.5 per cent in a hike of 25 basis points.

Tata Steel shares, quoting ex-bonus, fell to Rs 248.60, a loss of more than 4 per cent. Reliance Industries was bruised as well, hurtling down 3.39 per cent, or Rs 16.85, to Rs 479.90 on fears that a price cap would hit its bottomline.

Among other petroleum companies, ONGC slipped Rs 25.90 to Rs 685.35, HPCL Rs 5.15 to Rs 315.75, BPCL Rs 11.60 to Rs 333.95, Chennai Petroleum Rs 12.60 to Rs 136, IBP Rs 7.40 to Rs 573.70 and Indian Oil Rs 7.60 to Rs 393.30.

High-tech software companies like Patni Computers and CMC were among the few that bucked the decline; Hindalco, ICICI Bank and Ranbaxy also defied the tumble. Auto stocks went into reverse gear, felled by concerns that rising raw material costs could squeeze industry margins. Maruti Udyog slipped by Rs 12 to Rs 401.65 while Tata Motors declined by Rs 11.95 to Rs 422.00.

Many investors were ruing their decisions to invest in mid-cap stocks. “When disaster strikes, it comes in packs,” said one of them. Pentasoft Tech, Crest Comm, Nocil, Uttam Steel and Mukand Steel shed almost 10 per cent today.

BSE’s decision to put 51 stocks in the trade-to-trade segment frayed nerves further. Buyers have to take delivery of these shares, whose volumes plunge as speculation is snuffed out. Exchanges usually resort to this in an effort to quell rampant arbitrage in the market.

Traded volumes on BSE were Rs 1,926.99 crore, up from Rs 1,780.46 crore on Tuesday.

Email This Page