Sep 8, 2001|
Bourses: On a slippery ground
The BSE Sensex declined by 1.4% and the Nifty Fifty by 1.8% this week largely led by weakness in the TMT sector. The regulatorís renewed offensive against companies with dubious distinctions saw large scale sell off in second rung technology stocks.
Companies like HFCL, Global Tele, Sterlite Optical and Zee were the worst hit. Some of these companies also hit new 52 week lows. Tech pivotal, Infosys, was also one of the key losers this week. Out of the top 5 losers on the BSE Sensex this week, 2 belonged to the TMT bandwagon (namely Infosys and Zee). Infact, losses in these two companies alone knocked 23 points off the Sensex.
ITC was the other key spoilsport. The company was in the docks this week owing to its proposed merger plans with ITC Bhadrachalam. The company was anyway facing difficulties in its core business of cigarettes, but post announcement many market pundits downgraded the stockís rating. The stock thus closed at a new 52 week low. ITC losses set the Sensex back by nearly 17 points.
Refinery stocks were the other stocks of pain this week. With industry facing difficult times refinery companies are under pressure. Reliance Petro and HPCL were the key losers in this sector and together they accounted for over 18 points loss to the Sensex.
In contrast, this week belonged to the Indian pharma companies. Out of the top 5 gainers on the BSE Sensex, Cipla, Ranbaxy and Dr. Reddy took up 3 places. Together they contributed 24 points to the Sensexís kitty. The Indian companies continued success in the field of US generic markets as well as their future R&D potential continues to enthuse the bourses. Incidentally, Glaxo was also among the top 5 gainers. It has been a very long time since we have seen pharma dominance of the Sensex like this.
On the economic front, as it becomes increasingly clear that the government will not meet its fiscal deficit target and will have to resort to higher market borrowings, the rupee is slowly getting weaker against the dollar. There are opinions doing the rounds that the rupee may touch as low as 47.6 to a dollar. Meanwhile, the bourses received confusing signals as the finance minister ruled out backing an interest rate cut, when earlier newspapers reported quite the contrary.
As the macro economic indicators remain sluggish and recovery seems some time away, the bourses are likely to echo these sentiments. However, for the patient investor the Sensex below 3,200 seems as an attractive time to enter.
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