Markets Outlook: Shares to track privatisation meet in week ahead
Monday, 18 November 2002, 08:00 Hrs
MUMBAI: Indian investors are likely to closely track the outcome of a crucial high-level meeting called next week to resolve the impasse over the privatisation of state-owned firms before putting more money in the market. Prime Minister Atal Bihari Vajpayee is expected to meet select cabinet colleagues Tuesday on the contentious privatisation agenda that has hit a roadblock due to growing opposition within the ruling coalition. "The cloud of uncertainty hanging over the government's privatisation drive has badly affected the investor sentiment," said a fund manager with a foreign brokerage house. "I think it is time the government make its stand absolutely clear on the issue. This will provide a boost to the market. The sense of uncertainty affects the market sentiment more than any negative news," the fund manager said. The market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 3,033.91, registering a gain of 77.07 points or 2.6 percent over its previous week's close. India's gasping economic reforms came under fresh attack Thursday with Fernandes, who also heads the Samata Party, an ally of the ruling coalition, renewing his call for a review of the privatisation programme. Vajpayee has been at pains to defend the government's sell-off policy with its vocal opponents -- Human Resource Development Minister Murli Manohar Joshi, Fernandes and Petroleum Minister Ram Naik. "The latest developments on the privatisation front clearly shows that Vajpayee's assertion about the continuance of the reforms process has made little impact on those who want to either stall or at least delay the process," said a broker. "It's a bad news for the stock market and the country's economy as a whole. The investors are beginning to lose faith in government policies," added the broker with the Bombay Stock Exchange. A section of dealers, however, say that the market index may get a push in the coming sessions as operators pick up stocks of technology companies buoyed by reports of recent bulk order wins by domestic software developers. "The investors are churning their portfolio in favour of tech stocks on hopes of a strong growth in the sector in the current financial year," said the fund manager. "The buying in the tech sector will, however, not be able to sustain a long-term rally in the market. The institutional buying activity has to be broad-based for sustained recovery," he added. In the intra-week trade, the market opened the week lower as investors booked profit in new as well old economy sector in the absence of any positive buying trigger. The market index, however, staged recovery soon and surged sharply higher towards the end of the weekly trading session on buying in tech counters and a sharp rally on the U.S. bourses. The market mood was also boosted by reports that global equity index compiler Morgan Stanley Capital International had raised India's weightage in its emerging markets index to 4.25 percent from 4.21 percent. Global portfolio managers closely track the index to firm up decisions on allocating money to different countries. In the new economy sector, Wipro, one of India's leading software development and services major, rose 12.6 percent over its previous week's close to 1,487.50 after the firm said it expected to supply back office services to Microsoft. A Wipro official told reporters in Mumbai after meeting Microsoft chairman Bill Gates last week that the company was in the process of launching business process outsourcing for Microsoft. Wipro entered the back-office service business last year with the acquisition of Spectramind services. Infosys Technologies, one of India's top software makers, registered a weekly gain of 8.3 percent at 4,330.80 after it announced the signing of an agreement with Chandigarh to set up a software development centre. As part of the agreement, Infosys, the country's largest listed software exporter, will buy 20 acres of land at Chandigarh Information Services Park for the centre. In the old economy sector, commercial vehicles maker Tata Engineering gained 9.6 percent over its previous week's close to touch 158.25 on hopes of an improved financial performance in the quarter ending December 31. The company said Monday that its total vehicle sales in October rose 34.6 percent from a year earlier to 18,837 units.