Indian shares slump as Iraq war intensifies

Monday, 24 March 2003, 08:00 Hrs
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India's blue-chip stock market index slumped over one percent in early trade Monday, as jittery investors dumped heavyweight counters on fears that the military conflict between U.S.-led forces and Iraq may intensify.

NEW DELHI: Dealers said the investors rushed to take profit in shares as soon as the market opened Monday, depressed by signs over the weekend that the U.S. and British forces encountered "pockets of resistance" as they pushed through Iraq towards Baghdad.

At noon, the Indian stock market barometer 30-share Bombay Stock Exchange (BSE) sensitive index or Sensex was quoting at 3,171.79, a loss of 46.94 points or 1.46 percent from its Friday's close.

The market index had risen 115.24 points or 3.73 percent in the last three trading sessions as bruised investors bet on a quick resolution of the imminent U.S.-led military strike on Iraq.

"In the last three sessions that market had staged recovery on excessive optimism that the conflict would be over quickly," said Neeraj Deewan, who tracks share market for brokerage firm Prime Securities.

"But sentiment has been badly hurt by the weekend developments there. Now it looks like the war may not end as swiftly as earlier expected. It may only get worse in the days ahead as U.S. forces close in on Baghdad," Deewan told IANS.

U.S. Marines has taken casualties in the hardest fighting of the Iraq war in southeastern Iraq, when an army convoy was ambushed -- with some soldiers killed and captured -- as the coalition advanced toward Baghdad.

The coalition encountered pockets of determined resistance by irregular Iraqi forces who in some cases fought in civilian clothes or in modified commercial vehicles.

"Shares rallied in the last couple of sessions because of expectations of a short war without much damage to the global economy," said a share broker with the BSE.

"But the ongoing intense fighting may serve as a reminder that there are still risks involved and its not going to be easy for the U.S.-led forces to win. And the longer the conflict takes to resolve, the worse it is for the market."

Stock markets across Asia rallied last week as U.S.-led troops advanced into southern Iraq, ending months of uncertainty about the prospect of military action against Iraq, which has the world's second-largest oil reserves after Saudi Arabia.

Analysts say while India might manage to absorb the impact of a short war with little disruption in oil supplies, a prolonged military campaign would result in soaring oil prices and quashing the economy's attempts to right itself.

Besides India, benchmark indices in Singapore, Australia and South Korea also dropped for the first day in five sessions Monday on fears that protracted hostilities may disrupt supplies from the Middle East.

In the domestic market, consumer goods giant Hindustan Lever Ltd. was down 3.83 percent at 156.75 and Reliance Industries, India's largest refiner and petrochemicals maker, was quoting at 287.65, a loss of 2.3 percent.

In the technology sector, Satyam Computer Service was trading 2.87 percent lower at 204.90 on institutional selling pressure.

Satyam Computer Services, India's fourth largest software exporter, said its business activities in the Middle East region are "normal" despite the ongoing U.S. attack on Iraq.
Source: IANS

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