India's key share index finish lower for third day

Wednesday, 22 October 2003, 07:00 Hrs
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MUMBAI: Large-scale institutional profit taking in shares of heavyweight new as well as old economy companies continued unabated for the third consecutive session in the Indian market Wednesday.

The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 4,741.20, a loss of 14.52 points or 0.31 percent from its previous session's close.

Dealers said that the market opened the trading day on a positive note on fresh buying in shares of select traditional companies on expectations of improved earnings growth aided by a sharply higher economic growth in the current fiscal.

The market mood in the early trade was also boosted by sustained investment inflows by foreign institutional investors, which act as the backbone for India's liquidity starved capital market.

Foreign funds have infused $4.21 billion into the Indian stock market in the current year so far, registering a growth of nearly six times their net purchases last year.

The stock market, however, failed to maintain its gaining momentum for long and the benchmark index plunged into the negative zone as investors rushed to pocket gains on heavyweight counters.

"The market mood has turned extremely cautious after the turbo-charged gains in last few months. The market index had risen too high too soon in recent trades," said a broker with the Bombay Stock Exchange.

"The investors are now taking a very pragmatic view of their holdings and paring excessive exposure in any particular sector. The overall market fundamentals, however, continue to be very positive," said the broker.

While selling pressure on old economy counters was triggered by concerns over their earnings growth in the near-term, tech stock saw profit taking on concern over appreciation in the value of the Indian rupee against the U.S. dollar.

The rupee has risen nearly six percent against the dollar this year due to the dollar's global weakness and persistently strong foreign fund investment in Asia's third largest economy.

Analysts say earnings of top software companies may get pressurised by the rupee's strength in the current fiscal year. Most top Indian software makers on an average earn 70 percent of their annual revenue from the U.S.

In the old economy sector, Bajaj Auto, a leading two-and-three wheeler maker, fell nearly one percent to 857.05 despite a 54.6 percent rise in the past quarter net profit to 2.02 billion.

Shares of Ranbaxy Laboratories, the country's largest drug maker by sales, lost 0.3 percent to touch 989.05 after it reported a lower-than-expected quarterly profit growth of 25 percent from a year earlier.

Other major losers in the sector included Grasim Industries, Hero Honda, Gujarat Ambuja Cements, Hindustan Lever, state-run Shipping Corporation of India, and housing finance major HDFC.

In the tech sector, Infosys Technologies, India's largest listed software exporter, ended nearly one percent lower at 4,511.05 and Hyderabad-based Satyam Computer closed with a loss of 5.3 percent at 277.40.



Source: IANS
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