BOMBAY, 8 Julys — It was a very tumultuous week for the Indian stock markets. Firstly, it had to grapple with the situation of having no badla and deal with futures and options. And before it could get over that, a terrible crisis once again broke out in Unit Trust of India (UTI’s). There was a major crisis of investor confidence. Investors had yet to get over the 1999 US-64 crisis when a new US-64 crisis hit them.
On the first day of trading, on Monday, the BSE lost 30.75 points to settle at 3,426.03. And the NSE declined by 7.15 points to 1,100.75. The market players were in a very cautious mood as they had yet to come to terms with the new norms of trading. Volumes dropped, almost halved, following poor investor participation.
Selling was seen in heavyweight pivotals like Hindustan Lever, Reliance Industries, State Bank of India and Infosys. Hindalco, Bajaj Auto, BSES, Colgate and ICICI also settled in the red.
Himachal Futuristic Communication (down 8.91 percent to Rs. 80.70) lost ground after the company posted FY 2001 results wherein it declared a net profit of Rs. 127.89 crore.
On Tuesday, UTI announced its decision to freeze sale and redemptions on its US-64 scheme, triggering panic selling throughout the day. The BSE lost a whopping 113.74 points to close at 3312.29 points. The NSE shed 30.95 points to close at 1,069.80.
Big losers included heavyweights like Infosys Technology, Reliance Industries, Satyam Computers and Tisco — as these stocks were perceived to be big investors in UTIs US-64. Reliance Industries and Reliance Petroleum which form a substantial portion of UTI’s portfolio, lost ground on huge selling pressure.
UTI Bank also slipped on selling pressure as there were apprehensions about the bank extending loans against the US-64 units with a 40 percent margin at a rate slightly lower than that charged for loans against shares.
On Wednesday, there were reports that the government was unlikely to bail out UTI but with the UTI Chairman, P. S. Subramanyam, resigning, hopes were raised again.
Trading hours on NSE and BSE were extended up to 16:00 IST following the suspension of trading on NSE after some erroneous deals on the Reliance Petroleum and ACC counters pushed up NSE’s Nifty Index by over 424.50 points. While NSE investigated these freak deals, the market regulator, Securities and Exchange Board of India (SEBI), directed the stock exchanges to check abnormally priced trades. The BSE settled with a loss of 0.41 point to 3,311.88. The NSE shed 1.85 points to 1,067.95.
Rallis India was up after it was reported that it had sold its surplus land at Andheri, a Bombay suburb, to Tata Consultancy Services (TCS) for Rs. 133 crore. This is said to be the second largest sale of real estate in Bombay in recent times. The sword of US-64 continued to hang on the investors, and Thursday ended on a flat note.
The BSE ended the day with a marginal gain of 5.75 points at 3,317.63. The NSE gained 2.15 points to settle at 1,070.10.
On Friday, the BSE informed its members that the dummy circuit filter limits had been revised from 25 percent to 20 percent so as to have similar price bands at all exchanges. This had been introduced as a measure to check runaway prices in stocks that were far away from ruling prices.
Apart from this, the BSE also imposed a special margin of 25 percent on four scrips - Elbee Services (B1), Emco (B1), Godfrey Philips India (B1) and Jayant Agro Organics (B1) with immediate effect.
The markets, however, had yet another lackluster trading session. The BSE ended the week with a loss of 11.85 points to 3,305.78. The NSE shed 3.95 points to close at 1,065.80.
Turnover on BSE dropped to Rs. 760.37 crore from 4.67 crore shares traded.
Of the 1,456 issues traded, declines outnumbered advances with 888 losers and 430 gainers. The 138 issues remained unchanged.
Gold was at Rs. 4410/- per 10 gms and Silver was at Rs. 7350/- per Kg.
US$ against Indian Rupee was at Rs. 47.14, Pound Sterling at Rs. 66.04, Deutsche Mark at Rs. 20.17, Euro at Rs. 39.44, UAE Dhm at Rs. 12.84, Kuwait Dinar at Rs. 153.87, Bahrain Dinar at Rs. 125.09, Saudi Riyal at Rs. 12.95, Qatar Riyal at Rs. 12.57 and Oman Riyal at Rs. 122.49.