Free fall continues, Sensex tumbles another 150 pts

MUMBAI, MAR 3: Finance Minister Yashwant Sinha's assurances on the impact of Union budget proposals failed to arrest the slumping share pr...

MUMBAI, MAR 3: Finance Minister Yashwant Sinha’s assurances on the impact of Union budget proposals failed to arrest the slumping share prices on Friday. Stock markets across the country crashed further on sustained selling pressure by funds and unwinding of speculative positions by operators. The fancied Sensex tumbled further by 150 points as investors diversified their investment portfolio from cyclical to software and telecom shares.

With Friday’s fall, the Bombay Stock Exchange Sensex has lost 6.31 per cent since Sinha presented the 2000/01 (April-March) budget on February 29. Sensex opened at 5602.94 on Friday – which happened to be the day’s high – and nosedived by touching the day’s low of 5362.80, before closing at 5378.27 showing a net loss of 150.04 points or 2.71 per cent from the previous close of 5528.31. The NSE’s Nifty index ended 1.74 per cent or 29.50 points lower at 1667.05.

Sensex has dropped by 265 points in the last two consecutive trading sessions. After the 293-point crash on the budget day, Sensex had bounced back by 195 points on Wednesday. On Friday, the BSE-100 index also declined sharply by 137.04 points at 3313.18 from the previous close of 3450.22. Sinha’s claim that the industry and markets have not fully understood the budget failed to create any impact. “Sinha has reportedly said the first reaction is basically uninformed reaction and slowly people will understand his compulsions. What does it mean? Is he taking investors for granted? Most of the industry segments were let down by the minister. There is nothing for the market as well,” said an NSE dealer.

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Brokers said institutional investors who had built up positions in pharma, cyclicals and FMCG counters prior to the budget are currently engaged in diversification of their investmenet portfolios from pharma, cyclicals to software and telecom which reflected into a major drop. Reliance, the largest private sector company, crashed by another 8 per cent, or Rs 23, to Rs 269.10. Hindustan Lever, another industry leader, plummeted by Rs 148 to Rs 2,612.

Pharma companies, auto, FMCG and multinational companies continued their downfall. Ranbaxy and Dr Reddy’s led the selling in pharma stocks, Telco and Mahindra & Mahindra in auto stocks and virtually all MNC shares lost their ground in sustained unloading by funds and operators. Others like ACC, Telco and Tisco also reeled under heavy selling.

Software major Infosys ended at the upper end of the eight per cent circuit limit at Rs 10,965.20, restricting the market fall. Buying in Infosys was triggered by the 6.80 per cent gains of its American Depositary Receipts (ADRs) listed at the Nasdaq and a five-year deal with British retailing chain Sainsbury’s Supermarkets Ltd, valued at 28 million pounds (Rs 193 crore), dealers said.

The major gainers in the IT sector were Satyam Computer Rs 6,361 (Rs 5,890), Software Solution Rs 7,050 (Rs 6,600), Mastek Rs 5,077 (Rs 4,777), Aftek Infosys Rs 3,774 (Rs 3,495), Global Tele Rs 2,627 (Rs 2,432), Leading Edge Rs 2,463 (Rs 2,280), HFCL Rs 2,211.30 (Rs 2,047), DSQ Software Rs 2,079 (Rs 1,925) and Hughes Software Rs 3,883 (Rs 3,769).

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The broad market was hit badly on Friday with declining issues beating advancing issues 1,259 to 531 while 157 issues were unchanged. While some foreign institutional investors selectively picked up IT and telecom shares, others were sellers in a host of counters.