Indian shares reverse two-day rally on selling pressure

Friday, 26 September 2003, 07:00 Hrs
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MUMBAI: Institutional profit taking in shares of cement and select old economy companies pulled down India's benchmark stock market index in the negative zone Thursday, reversing the previous two session's gaining streak.

The stock market opened weak compared to Wednesday's close with investors rushing to book profit in technology companies following an overnight fall in the tech-laden Nasdaq stock exchange.

The selling pressure gained ground in the intra-day trade as heavyweight cement counters also witnessed profit taking on fears that a surge in oil prices in the global market would impact the profitability of cement makers.

Mirroring the bearish sentiment, the stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 4,297.15, a loss of 59.24 points or 1.36 percent.

"The market had staged smart rally in last few sessions on better economic prospects. Now the investors are looking for some other positive trigger," said a broker with the Bombay Stock Exchange.

"I think the market will continue to witness see-saw trade in the days ahead and it would get a direction after bleu-chip corporate houses announce their financial results early next month," the broker added.

The market had staged smart rally in the last two consecutive sessions on hopes that the country's economy would post a sharply higher growth in the current fiscal year following a sharp jump in the agriculture output.

The Reserve Bank of India, the country's central bank, expects the Indian economy to post a healthy growth in the current fiscal year on a sharp increase in agriculture production.

"The growth process would be facilitated by benign inflationary conditions, adequate liquidity coupled with soft interest rates and a strong external sector," said Y.V. Reddy, governor of RBI, in a statement issued Tuesday.

Reddy said the Indian economy, Asia's third largest, would grow six percent in the current financial year up from 4.3 percent in the previous year.

While tech stocks were major losers following the overnight decline in the U.S. markets, shares in the old economy sector, mainly cement and automobiles, were subdued on growing fears that the rising oil cost may hurt performances.

In the old economy sector, Hero Honda Motors, India's largest motorcycle maker, lost 4.2 percent to touch 285.50 and Tata Motors, the commercial vehicle manufacturing arm of the Tata group, ended nearly one percent lower at 292.30.

Bajaj Auto, a leading two-and-three wheeler maker, closed with a loss of 0.8 percent at 756.45 on institutional profit taking.

Shares of cement companies such as Associated Cement Companies closed with a loss of 2.1 percent at 193.95, Gujarat Ambuja Cements was down 1.8 percent at 218.50 and Grasim Industries declined 1.5 percent to 618.65.

Other major losers in the sector included Hindustan Lever, Reliance Industries, State Bank of India, ITC and India's largest pharmaceutical company Ranbaxy Laboratories.

In the tech sector, Hyderabad-based Satyam Computer fell 3.6 percent to 243.85 and HCL Technologies, a New Delhi-based software development and services major, ended 1.9 percent lower at 161.30.

Infosys Technologies, India's largest listed software exporter, lost 0.2 percent to touch 4,514.85.

Source: IANS
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