Black Monday for Dalal Street

As a result, investors’ wealth — market capitalisation or total market value of all listed shares — fell by Rs 36,000 crore to Rs 11,42,657 crore on Monday.

After a good opening, the market turned extremely bearish in the absence of buying interest from Indian funds and foreign investors. With the end of the public offers from the government, support from government institutions – LIC and UTI – appears to have taken a back seat for a while. Besides, having earned huge gains in the last one year, investors booked short-term losses in stocks in order to reduce tax liabilities for the year. Said stock dealer Pawan Dharnidharka, “Some money is being taken out of the market to pay taxes. There are concerns that investors’ money may remain locked in a recent slew of public offers.”

With this fall, the Sensex has lost 319.30 for the year 2004 so far. From its all-time high of 6,249.60 touched in intra-day trades on January 9, the Sensex has lost 728.95 points so far. All the scrips forming the BSE Sensex ended in the red for the day.

But surprisingly, despite a massive fall, there was no panic in the market as selling in stocks has been forced by circumstances (fiscal year end, lack of support) rather than due to any substantial economic or corporate reason. The mood in the market appeared cautious amid concerns that income-tax considerations towards the end of the fiscal year may keep investors away from the market in the short term.

While investors are unwinding long positions, brokers are advising investors against taking fresh positions at present on account of the approaching year end. “With the general elections fast approaching, investors are likely to take a wait-and-watch approach before making a long-term call on the market. The market may fall further,” says NSE dealer Pradeep Bhavnani.

Meanwhile, foreign fund inflows have improved of late. They put in a net Rs 201.90 crore on Thursday (March 11), which was substantially higher than the inflow of Rs 61.40 crore on Wednesday (March 10) and Rs 45.40 crore on Tuesday (March 9). FII inflows in the first few days of March 2004 (till March 10) have reached Rs 1,860.40 crore. In the month of February 2004, FIIs put in a net Rs 2,397.50 crore, that was lower than the inflow of Rs 3,176.70 crore in January 2004.

Steel major Tata Steel (down 7.86% to Rs 388.50) lost ground. Power sector pivotals Tata Power (down 7.56% to Rs 764.95) and Reliance Energy (down 2.30% to Rs 722.60) lost ground on selling pressure.