Sensex Plummets 2.8% on Budget Worries

Ivaylo
23 Feb, 2001
New York City

Sensex opened with a positive bias above the psychologically important 14,000 level, but plummeted on selling in large-caps. Traders were unwinding long positions, wary ahead of the Union Budget. Bank, cement and pharma stocks were the worst hit with Grasim leading the decliners. Only Tata Steel advanced from the stocks in the Sensex. Wholesale inflation fell to 6.6%. Mukesh Ambani may be forced to inject $2.2 billion in Reliance Industries.

[R]8:00AM NY-7:00PM Mumbai Sensex finishes with a heavy loss, Grasim tumbles.[/R]
The Sensex on BSE ended 388.78 points, or 2.77%, lower at 13,632.53. The market-breadth was very weak and five stocks fell for each stock gaining. As 2,211 stocks declined, only 404 advanced and 38 remained unchanged. Of the 30 stocks in the Sensex, only one advanced, while the other 29 declined. The turnover on BSE was Rs 4,563.10 crore, higher than Rs 4,243.02 crore on Thursday. On NSE, the turnover was Rs 10,337.47 crore, lower than Rs 11,717.01 crore on Thursday.

Economic and corporate news

Wholesale inflation declined to 6.63% during the week ended February 10th from the record level of 6.73% at the end of previous week. Lower prices of food products, including vegetables, egg, mutton, poultry, sugar, spices and manufactured products led the drop in inflation. Inflation is still above the RBI target range of 5%-5.5%.

U.S. retail giant Wal-Mart Stores and Indian Bharti Enterprises are very close to finalizing a deal for a retail joint venture, Bharti announced on Friday. Wal-Mart announced on Thursday it was also in talks to partner Bharti on supply chain logistics and providing technology support.

Arcelor Mittal, the world largest steel company, said today that it has signed various Agreements with the State of Senegal in West Africa to develop iron ore mining in the Faleme region of South East Senegal, a project that may involve an investment of approximately $ 2.2 billion.

Trading highlights

New Issue, Power Finance Corporation was listed today at Rs 104 as against its issue price of Rs 85. Despite the negative sentiment on the market, the stock ended with a gain of 31% (Rs 26.55) at Rs 111.55.

Power Finance Corporation was also the most active stock with a turnover of Rs 450.80 crore followed by Reliance Industries and Tata Steel.

Advancers

Tata Steel was the only advancer in the Sensex stocks, up 0.7% to Rs 459.2. It traded as high as Rs 466.85. Reportedly, Corus, newly-acquired by Tata Steel company, had raised hot/cold rolled prices for European markets by 5% - 7% for the second quarter 2007 deliveries, which supported Tata Steel shares.

Decliners

Grasim led the decliners today. The stock lost almost 6% to Rs 2,271.1. Telecom services provider Bharti Airtel was another prominent decliner, down 5.7% to Rs 756.1. ITC closed down 4.6% to Rs 166.1 and Reliance Communications, off 4% to Rs 432.4. Privately controlled ICICI Bank slumped 4.3% to Rs 907.9, as a surprise hike in CRR announced recently continues to weigh on the stock.

Maruti Udyog declined 1.50% to Rs 866. The government on Thursday invited potential buyers from public sector financial institutions, banks and mutual funds for selling its remaining 10.3% stake in the company.

Reliance Industries finished almost flat, down 0.1% to Rs 1,412.80. The company board is expected to meet on February 24th to review plans for raising $2 billion. Mukesh Ambani, the largest stock holder in the company is likely to buy preference shares and warrants up to $2.2 billion. The company is looking for ways to increase capital to invest in various projects from retailing to oil and gas exploration.