BOMBAY, 27 June 2004 — The Indian stock markets this week witnessed a spell of mixed trading. Uncertainties regarding the progress of the reforms process, rising interest rates and fuel prices, and depreciation in value of the rupee played spoilsports.

Investors appeared to be waiting for the new government’s budget, which is scheduled for 8 July 2004. On the first day of trading, Monday, for almost the entire day, the market remained lackluster but selling in the last half hour pulled down the indices.

Sell-off mainly emerged across bank shares due to fear of an increase in farm lending. Pharma stocks also took a beating due to a dull revenue outlook for generic pharma companies in the US. The BSE ended the day with a loss of 31 points at 4739.

Shares of public sector banks received a setback following government’s announcement on Friday that it planned to increase farm credit by banks to 30 percent.

Tata Motors was down though the company won a license from the government of India to manufacture defense-related vehicles.

PSU engineering major Bhel was up. The company has bagged Rs. 80 crore export order from Petroleum Development Oman to supply a gas compressor package to be set up at Lekhwair, 450km from Muscat.

On Tuesday, the markets ended flat amid narrow movements in stock prices in the absence of fresh triggers. The BSE closed with a loss of 2.76 points at 4,735.86. Auto, pharma and oil stocks contributed significantly to the weakness in the market.

PSU petroleum major ONGC fell sharply after it reported a 17.7 percent dip in net profit in 2003-04. It declared a dividend of Rs. 24 per share which includes Rs. 14 per share paid as interim dividend previously.

MTNL firmed up on renewed buying interest amid talks that the government may merge the PSU telecom major with unlisted BSNL.

Grasim Industries ended the day in positive territory. The company is finally set to take management control of Ultra Tech CemCo, the cement company carved out of Larsen & Toubro, with its open offer for 30% of the company’s equity finding favor with the institutional and retail shareholders.

On Wednesday, the bearish trend gained momentum with selling across the board. Investors sold heavily ahead of the expiry of the June contracts. The BSE ended with a loss of 91.86 points at 4,644 which is its lowest since May 17, 2004.

Automobile pivotals ended the day in negative territory amid the fear that high fuel price would hurt their sales. Cement pivotals also lost momentum as there is concern that the monsoon season would reduce the sales of cement companies. A major happening was the re-listing of Larsen & Toubro Ltd. after having demergered its cement business. The engineering major’s shares of face value Rs. two closed higher at Rs. 635.35.

On Thursday, short-covering in blue chips lifted the market toward the close of the session. Gains were seen in technology, bank and pharma stocks. The BSE ended with a gain of 64.55 points at 4,708.55.

Bharat Tele-Ventures and MTNL were big losers of the day. Telecom services providers have been hit by reports from the Telecom Regulatory Authority (TRAI) which said the average revenue per user (ARPU), a key measure in the telecom sector, for GSM operators fell 4.6% to Rs. 436 per month in the January-March 2004 quarter from Rs. 457 during the October-December 2003 period on the back of falling tariffs.

On the other hand, Reliance Industries was a major gainer as it had two good news to celebrate on. First was that it had struck gas off the Orissa coast with reserves estimated at four to five trillion cubic feet.

Second was that it had finalized the purchase of Frankfurt-based leading polyester maker Trevira, division of Hoechst, now owned by Franco-German company Aventis.

And on Friday, the markets continued to remain positive. Strong buying interest in index heavyweights lifted the markets with buying seen in cement, auto, steel and energy stocks. The BSE ended with a gain of 47.84 points at 4,756.39. For the coming week, all eyes are now on the Union Budget 2004-05. The market is expected to remain range bound till then. Gold was at Rs. 5,970/- per 10 gm and Silver was at Rs. 9,530 per kg.