Indian shares end lower on profit taking at higher levels

Friday, 31 December 2004, 08:00 Hrs
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MUMBAI: India's benchmark share market index finished in the negative zone Thursday, snapping a bull-run in the last five consecutive sessions, as investors rushed to pocket gains at higher levels.

Dealers said that the stock market opened for the trade with a small positive gap as investors adopted a cautious approach a day after the key share index closed at an all-time high.

After moving within a close range for the better part of the day, the market index slipped into the red in the second half of the trading session as investors rushed to pocket gains on new as well as old economy counters.

The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 6,522.54, a loss of 45.40 points or 0.69 percent from its previous session's close.

"Some of the stocks had risen too high too soon in the past few sessions' bull-run and a moderate correction was perfectly in order," said Neeraj Deewan, an equity market analyst with Quantum Securities.

"The correction will give investors an opportunity to consolidate their portfolio. The overall market fundamentals continue to be very strong and shares are expected to stage a recovery rally soon," he added.

Analysts say hopes of robust quarterly corporate earnings will encourage institutional investors to enlarge their position on heavyweight counters in the days ahead.

A host of blue chip new as well as old economy companies will start unveiling their October-December financial earnings reports from the first week of next month.

Hopes of robust economic growth and corporate profits in the current fiscal year are encouraging foreign funds to increase their allotment for this market. Many new overseas funds are exploring the possibility of investing in India.

Foreign funds have collectively put a record over $8.5 billion into the Indian capital market in the current calendar year, up from $6.5 billion worth of inflows in the corresponding period of the previous year.

A slew of overseas fund managers are looking to make their fortune in India as Asia's fourth largest economy sheds its decades of casino like stock trading practices in favour of world-class regulatory systems.

Adoption of stringent corporate governance norms by companies and easier investment guidelines are also helping foreign institutional investors to loosen their purse strings in India.

India's economy is projected to expand by 6-6.5 percent in the current fiscal year ending March 31, 2005.

Although the projections are lower than previous year's 8.2 percent growth, experts say India would continue to rank in the list of the fastest growing economies globally.

In the technology sector, Hyderabad-based Satyam Computer lost 2.2 percent to touch 405 and Infosys Technologies closed with a loss of nearly one percent at 2,055 from its previous close.

In the old economy sector, shares of Reliance Industries, India's largest private business conglomerate, ended 1.1 percent lower at 525.30 on fresh institutional selling pressure.

Other major losers in the sector included Tata Motors, Tata Power, Gujarat Ambuja Cements, and Associated Cement Companies.

Source: IANS
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