Shares of Indian state-run firms soar on privatisation booster

Friday, 06 December 2002, 20:30 IST
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MUMBAI: Shares of public sector companies rose sharply higher on Indian bourses in early trade Friday on hopes that the government's gasping privatisation drive would gain momentum in the days ahead. Reflecting the bullish sentiment, at noon the market barometer 30-share Bombay Stock Exchange sensitive index or Sensex was quoting at 3,293.69, a gain of 63.96 points or nearly two percent over its previous close. Dealers said large-scale institutional buying in shares of blue-chip state-run companies mainly triggered the market rally in the intra-day trade. "The investor sentiment on public sector counters has been greatly boosted on reports that the government has reached a consensus on resuming the divestment process," said Neeraj Deewan, an analyst with Quantum Securities. "The investors are enlarging position on almost all public sector stocks on hopes that the government would now accelerate the pace of divestment exercise," Deewan told IANS. Disinvestment Minister Arun Shourie said late Thursday that the government had found common ground on stalled privatisation process of two state-run oil majors - Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL). The announcement came two days before the deadline for deciding on the stake sales of HPCL and BPCL. The government was forced to postpone the sell-off process of two oil giants for three months in September due to intense political squabbling. "We have reached a unanimous view on disinvestment," Shourie said after a meeting of top ministers chaired by Prime Minister Atal Bihari Vajpayee. The minister refused to give any details, saying the prime minister had asked him to make a statement in parliament. Reacting to the news, shares of HPCL rose as much as 21 percent to 271.50 in the intra-day trade, while BPCL was quoting at 215.50, a gain of 10.4 percent over its previous session's close. The market value of HPCL and BPCL shares had dropped over 30 percent in September after Petroleum Minister Ram Naik and Defence Minister George Fernandes forced through a three-month delay on selling stakes. Shares of other state-run companies such as Indian Oil Corporation, Bharat Electronics, Engineers India, National Aluminium Company, Shipping Corporation and Bharat Earth Movers also contributed to the market index gain. "Although it will be difficult for the market to sustain gains on public sector counters in the short to medium term, it has definitely brought back investor interest in shares of state-run companies," said Deewan.
Source: IANS