Indian markets to remain choppy and listless
Saturday, 15 May 2004, 19:30 IST
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MUMBAI: Having seen a key index shed over around 600 points or 10.6 percent last week over the fluid political situation, Indian markets await some positive signals from the central bank's annual policy announcement Tuesday. They also hope the constituents of the Congress party-led coalition, which is set to form the next government by Tuesday, would immediately come out with a common economic programme and remove the doubts created by some individual leaders about the reform process. Statements from some Left leaders like Sitaram Yechuri and A.B. Bardhan, who expressed deep reservations over some aspects of economic reforms such as divestment of equity in state-owned units, had rocked the market Friday. In a bloodbath that followed, equities fell across the board and hammered the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) to its steepest intra-day fall in four years. From the level of 5,409.34 points at which the Sensex opened Friday, the selling frenzy saw it dip to 5,043.99 points at one point - an intra-day drop of 365.35 points or 6.75 percent and the steepest since April 4, 2002. The markets had been choppy the entire week, one that saw equities sway wildly from one extreme to another. Sentiments were first hit by the prospect of a hung parliament predicted by the final set of exit polls and then by the unexpectedly huge margin of defeat of the Bharatiya Janata Party-led coalition in the national election. Barely had the markets managed to recover towards the end of trading Thursday, some key constituents of the Congress party-led alliance made remarks that markets saw as a threat to the future of economic reforms. "Markets now wait in anticipation for some positive signals from Reserve Bank Governor Y.V. Reddy," said the manager of a mutual fund, referring to the central bank's monetary policy for 2004-05 to be announced Tuesday. "The remarks today by Manmohan Singh on keeping the markets healthy and on economic reforms sounded rather weak, since it would depend much on the stand leftist parties take on some crucial matters," he said. "The only saving grace is the fundamentals of the economy are strong." In the last five trading sessions, market sentiments were particularly week for stocks of public sector undertakings (PSUs). The PSU index of the BSE lost a whopping 22 percent last week, with a 14.4 percent drop on Friday alone. Not a single PSU share among the 47 that comprise the BSE PSU index could end higher. Among the Sensex stocks, public sector counters led the list of losers with significant losses for Mahanagar Telephone Nigam Ltd., Hindustan Petroleum and Oil and Natural Gas Corp. The counters for Tata Power, Bharti Televentures, Tata Iron and Steel, and Zee Telefilms were also weak. Analysts were unwilling to hazard a guess on specifics of market movement next week. "The only thing I can sense is the markets will be choppy and range bound for the next couple of months," said an analyst with a brokerage. "Then on it would depend entirely on the direction which the new finance minister seeks to give to the economy."
Source: IANS
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