BOMBAY, 13 June 2004 — The Indian stock markets were in a lackluster mood of trading this week. Lack of any positive triggers and uncertainty over the economic policies of the new government led to a pall of skepticism spreading over Dalal Street.
On Monday, the market continued with last week’s trend of buying and this helped the BSE Sensex end the first day of the trading session in the positive zone. Up as much as 102 points at one point, the BSE finished with a modest gain of 49.15 points at 4,938.15.
The day was made by the optimistic economic agenda unveiled by the new government, announced by the President of India, Abdul Kalam. The president promised massive public investments in agriculture and industry, reassured that foreign direct investment would be encouraged. He also said that there would be selective privatization of public sector units and comprehensive tax reforms would be announced to achieve 7-8% growth.
Following this, infrastructure-related stocks were in the limelight after Kalam emphasized on infrastructure development. Construction/infrastructure stocks like JMC Projects, IVRCL Infrastructure, Gammon India, Valecha Engg, Hind Construction and Nagarjuna Construction recorded strong gains.
Tata Steel fell after the company declared a bonus issue in the ratio of 1:2 - one share for two held.
On the other hand, Federal Bank zoomed up after it declared a liberal 2:1 (two shares for each share held) bonus.
On Tuesday, trading remained lackluster for almost the entire day but toward the last half hour of trading, stocks perked up due to fresh buying. Consequently, the BSE ended with a gain of 24.48 points at 4,962.63.
Zee Telefilms jumped up amid hopes of improved results for April-June 2004 quarter on the back of strong advertisement revenues on account of elections in May 2004.
Tata Motors was also up after the company announced a 36% rise in vehicle sales in May 2004 from a year ago. It exported 1,651 vehicles, up 31% from a year earlier
Cement pivotals ACC and Gujarat Ambuja Cements made headway on hopes that the consumption of cement will grow following the government’s thrust on infrastructure development.
On Wednesday, the market remained range bound. Profit booking toward the last hour of trading wiped off all the gains made earlier during the day. Thus the BSE ended with a marginal gain of 1.21 points at 4963.75. Selective buying was witnessed in auto, banking, telecom and energy stocks.
Reliance Energy was one of the bigger losers of the day as its buy back price of Rs. 525 per share was much below the market expectations.
MTNL gained further ground on reports that the PSU telecom service provider is likely to bid for Rwanda Telecom, which has been put up for disinvestment by the African country. Mastek was also up. The company commenced its share buy-back program late last month at a maximum price of Rs. 320 per share.
On Thursday, the markets remained subdued throughout the session. The mood was bearish and volumes were also low, indicating reduced participation by investors. The BSE Sensex ended the day with a loss of 19.11 points at 4,944.64.
Automobile stocks Tata Motors, Maruti Udyog, and Hero Honda lost further ground as selling continued amid fears of an imminent hike in prices of petroleum products.
Britannia was in the limelight as its buy back is expected to commence on 17th of June. As per the buyback program, which will be conducted through open market purchases, the company has set a maximum buyback price at Rs. 650 per share. It plans to buy back a maximum 25 lakh shares for an amount not exceeding Rs. 78 crore.
Tube Investments saw a lot of activity after the company announced a liberal 1:1 bonus, a dividend of Rs. 10 per share for FY 2004 and a robust Q4 net profit.
On Friday, relentless selling in blue chips and mid-cap stocks dragged the indices deep into negative territory. Stocks of PSU and banking sector stocks were the worst hit on the bourses. The BSE ended with a loss of 111.93 points at 4,832.71. Markets slipped deep into negative territory amid uncertainty over the new government’s economic polices.
Orient Abrasives plunged despite the company declaring a liberal 1:1 bonus. Shares of the commercial vehicle and buses major, Ashok Leyland came off the higher levels though it announced a 32% growth in Q4 March 2004 net profit.
Shares of the engineering and construction company, IVRCL Infrastructures plunged after it reported a 50% fall in Q4 March 2004 net profit.
