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Bank stocks pull Indian market 0.6 percent lower
Tuesday, 06 July 2004, 19:30 IST
MUMBAI: Large-scale institutional selling pressure in shares of banking companies following a new proposal of the central bank pulled India's key share market index 0.6 percent lower Monday.
Dealers said that the stock market opened for the day little changed from its previous session's close with institutional investors adopting a cautious approach ahead of the presentation of the annual financial budget.
The market index slipped lower in the early trade as investors rushed to pocket gains on banking counters in the wake of a new central bank proposal to cap foreign investment in the sector.
The losing momentum gained ground in the second half of the trading session with the institutional selling pressure also spreading to stocks of cement and select other industrial sectors.
Mirroring the bearish market sentiment, the stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 4,843.77, a loss of 26.81 points or 0.55 percent from its previous session's close.
"The market mood was already jittery ahead of the presentation of the budget. The new central bank proposal for banks has added to the bearishness on the bourses," said a broker with the Bombay Stock Exchange.
The Reserve Bank of India last weekend proposed that holdings by individual investors or a group of investors in a private bank should not exceed 10 percent of its paid-up capital and foreign investments should be restricted to 10 percent.
India's new Congress-led coalition government will Thursday present the central budget for the current fiscal year ending March 31, 2005.
Analysts and market traders say investors are likely to consolidate their portfolio in the run up to the budget after resorting to large-scale bargain hunting on heavyweight stocks in the week ended Friday.
The United Progressive Alliance government, which is supported by Left parties from outside, is expected to present a budget that would mainly seek to boost the agriculture and rural sectors.
Investors hope that the annual fiscal package would also have some incentives for the financial market that has been in the grip of uncertainty since the new government assumed office.
In the old economy sector, ICICI Bank, one of India's fastest growing private sector banks, lost 3.9 percent to touch 
235.50 and HDFC Bank closed with a loss of nearly one percent at 361.65.
Shares of major cement producers such as Grasim Industries ended 2.4 percent lower at 1,012.90, Associated Cement Companies closed with a loss of 1.2 percent at 237.20, and Gujarat Ambuja Cements was down 1.1 percent at 272.25.
Other major losers in the sector included Hindustan Petroleum Corporation, Oil and Natural Gas Corporation, Bharat Heavy Electricals, Tata Motors, and carmaker Maruti Udyog Ltd.
In the technology sector, Wipro, the country's largest software maker by market capitalisation, fell 0.8 percent to 523.55 and Hyderabad-based Satyam Computer closed with a loss of 0.6 percent at 308 on selling pressure.
Source: IANS
235.50 and HDFC Bank closed with a loss of nearly one percent at 361.65.
Shares of major cement producers such as Grasim Industries ended 2.4 percent lower at 1,012.90, Associated Cement Companies closed with a loss of 1.2 percent at 237.20, and Gujarat Ambuja Cements was down 1.1 percent at 272.25.
Other major losers in the sector included Hindustan Petroleum Corporation, Oil and Natural Gas Corporation, Bharat Heavy Electricals, Tata Motors, and carmaker Maruti Udyog Ltd.
In the technology sector, Wipro, the country's largest software maker by market capitalisation, fell 0.8 percent to 523.55 and Hyderabad-based Satyam Computer closed with a loss of 0.6 percent at 308 on selling pressure.
Source: IANS