Investors pull out Rs 33,000cr, Sensex dips 2.6%

Investors pulled out a whopping Rs 33,000 crore from the stock markets on Monday as they disinvested in the secondary markets to put money i...

Investors pulled out a whopping Rs 33,000 crore from the stock markets on Monday as they disinvested in the secondary markets to put money in a slew of public offers from the government. Recording its fourth straight fall, the Bombay Stock Exchange Sensitive Index (Sensex) plunged by 152.68 points, or 2.61%, at 5,698.04. The National Stock Exchange S&P CNX Nifty Index lost 44.25 points, or 2.40%, to end at 1,808.20.

As a result, the market capitalisation (total market value of all listed shares) plunged from Rs 11,80,474 crore to Rs 11,47,182 crore on Monday.

The mood in the market appeared cautious amid worries that some liquidity may get sucked out of the secondary market amid public offerings from the government for several companies. “Apart from the IPO factor, the market is also worried about election uncertainties,” said NSE dealer Pradip Bhavnani.

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According to market circles, investors are shifting money from stock markets to the primary market. “No doubt, money is going out of the stock markets. Many investors are selling stocks to apply for mega issues of ONGC and Gail. Besides, ICICI Bank is also planning a mega issue,” said BSE broker Pawan Dharnidharka.

The Sensex had had lost 160.94 points, or 2.67%, last week on selling pressure. From a recent high of 6,082.80 touched on February 18, the Sensex has declined 384.76 points on sustained selling pressure. From its all-time high of 6,249.60 touched on January 9, the benchmark index has lost 551.56 points. For the year 2004, the Sensex has lost 141 points so for.

Taking advantage of the ‘feel-good’ factor in the economy and the booming stock markets, the government has planned to raise over Rs 12,000 crore by sale of its stake in companies like ONGC, Gail India, IPCL, IBP and CMC. While the public offer of IPCL opened last Friday, those of IBP and CMC opened on Monday. ONGC is coming out with a Rs 10,000 crore issue on March 5.

PSU stocks traded weak after the government adopted the policy of offering the shares at substantial discounts to the current market prices. Since these issues are being made at a discount to the market price, investors sold in them so they can subscribe later and avail of that discount.

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The market, meanwhile, has ignored a couple of positive developments. Foreign funds were buyers. FIIs remained net buyers February 19, 2004, pumping in a net Rs 258.90 crore on Thursday as compared to an inflow of Rs 377 crore on Wednesday. The cumulative FII inflows for February 2004 has reached Rs 2,536.90 crore. Besides, Finance Minister Jaswant Singh last week said that India’s economy grew by 8.9% in the third quarter, outstripping the 8.4% growth in the second quarter from July to September 2003.

Media major Zee Telefilms (down 8.39% to Rs 129.40) lost further ground—coming off its day’s high of Rs 142.25 — as selling pressure continued on the counter. Bajaj Auto (down 5.95% to Rs 863.65) slipped below the Rs 900-mark as selling pressure continued. Other automobile pivotals Hero Honda Motor (down 5.71% to Rs 484.25) and Tata Motors (down 5.25% to Rs 523.55) also lost sharply on selling pressure after recent gains.

Private sector banking major ICICI Bank declined from a high of Rs 300.90 to a low of Rs 280.15 before settling at Rs 281.55, down 5.41% from its previous close. Cement pivotals Grasim (down 4.84% to Rs 1,090), L & T (down 4.04% to Rs 521.25), ACC (down 3.86% to Rs 251.70) and Gujarat Ambuja Cements (down 3.08% to Rs 296.30) lost ground on selling pressure.

Reliance Industries (down 4.25% to Rs 563.90), State Bank of India (down 3% to Rs 87.70) and Hindustan Lever (down 2.68% to Rs 174.55) also contributed significantly to the fall of the Sensex.