Re plummets again on war fear

MUMBAI, JUNE 15: The Indian rupee plummeted by another 16 paise to 43.32/33 against the dollar as tensions between India and Pakistan ove...

MUMBAI, JUNE 15: The Indian rupee plummeted by another 16 paise to 43.32/33 against the dollar as tensions between India and Pakistan over Kashmir showed no signs of easing on Tuesday. Share prices also dipped with the Bombay Stock Exchange Sensitive index Sensex falling by 49 points amidst fears that the Kargil situation might take a turn for the worse in the coming days.

The rupee weakened to an intra-day low of 43.32/33 as the Kargil situation threatened to worsen with rumours of fresh air strikes on the border areas. Opening the day at 42.15/20 from the previous day8217;s close of 43.15/16, the rupee was seen lower at 43.18/20 in early trade before falling to its day8217;s low of 43.31/33 on good corporate demand for dollars. quot;The sentiment in the spot market was affected after a few export cancellations,quot; said K N Dey, senior vice president, Mecklai Financial Services. Many deals were struck at the 43.32/33 level.

8220;Both the countries have hardened their positions after talks between their foreignministers to resolve the crisis failed on Saturday,8221; said a dealer about the gloomy situation in the financial markets. Dealers said concerns that capital flows into the country could reduce as the current conflict appeared long drawn out was likely to keep the dollar bid.

8220;The rupee is likely to remain under pressure, but the central bank is expected to check undue volatility in the market through direct intervention or dollar sales using state-run banks. The corporate dollar buying interest is expected to continue following Tuesday8217;s slide in the rupee,8221; said another dealer.

Meanwhile, pivotals moved widely on the Bombay Stock Exchange BSE amidst alternative bouts of buying and selling to close further down. The session commenced on a better note but failed to hold the ground following brisk unloading in infotech stocks.

Sensex started higher at 3965.97 and touched the day8217;s high of 4001.98, but crashed by 109 points to touch the day8217;s low of 3892.30 before closing at 3901.73, showing a net lossof 49.23 points as against the previous close of 3950.96 points. The BSE-100 index too declined sharply by 23.49 points to 1689.28 from the previous close of 1712.77.

Brokers said the sentiment was affected mainly due to lack of buying support from foreign institutional investors FIIs. Software shares suffered badly while the pharma shares witnessed a mixed trend. The early upsurge which lifted the Sensex past the 4000 mark was attributed to short-covering by operators in heavy weighted index scrips. However, stocks dropped substantially in the closing stages. Marketmen said continuing fears over a war between India and Pakistan unnerved market players who in turn preferred to wind up positions at the fag end.

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Of the 148 traded specified scrips, 115 recorded declines while 28 advanced and five held steady. Satyam Computer was the most active scrip with a turnover of Rs 165.62 crore of the total volume of business of Rs 1713.89 crore substantially higher than Rs 1151.78 crore posted yesterday. The scripdropped sharply by Rs 71.70 to Rs 1165.40 on selling pressure. Pentafour Software lost by Rs 82.30 to Rs 946.70, Larsen by Rs 14.15 to Rs 300, Reliance by Rs 4.30 to Rs 173.50, SBI by Rs 8.80 to Rs 234.20 and ITC by Rs 16.50 to Rs 1003.50. However, Hindustan Lever improved by Rs 4 to Rs 2221 and Tisco by Rs 1.70 to Rs 127.10 on short covering.