Sensex falls by 41.79 points

Morgan Stanley Capital International, (MSCI), an arm of Morgan Stanley Dean Witter said late Wednesday that it is adding 14 companies and deleting 10 companies in its MSCI India Index after taking all the changes into composition. It also announced a drop in India’s weightage in the Emerging Markets Free Index to 7.45 percent from 9.08 per cent.

Shares of Zee Telefilms and Himachal Futuristic Communications Ltd rose after they were included in the index, while shares of Wipro Ltd fell as its weightage was cut to 30 per cent from 100 per cent. Zee was up 3.3 percent at Rs 518.25, Satyam Computere Services Ltd up 3.14 per cent at Rs 2,991.10. Reliance Industries was one of the major losers, dropping 2.89 per cent to Rs 309.65.

The markets remained lacklustre for a major part of the part of the day, but as some heavy selling came in during the closing hours of Thursday, the Sensex closed 44 points lower to 4190. According to brokers, since most of the institutions were not active in the market owing to a bank holiday, the day’s trading was listless with low volumes.

On Thursday, most of the software counters closed steady. “We were expecting some selling to come in during the day, some positions are to be liquidated on the last day of the current settlement,” said a dealer with a domestic broking house. However, the refinery stocks managed to attract huge buying interest for the second consecutive day.

ASIAN MARKETS FALL: Fears US Interest rates are nowhere near their peak drove Tokyo and other Asian stocks lower on Thursday, while a shift in Morgan Stanley Capital International (MSCI) index weightings hit Hong Kong badly.

Asian stocks generally followed Wall Street and the Nasdaq down after the US Federal Reserve indicated inflation, the main target of its relentless series of recent rate rises, was still a top concern despite this week’s latest half per cent hike. "People are getting worried about how an aggressive interest rate rise will affect the local market," said Herbert Lau, associate director of research at Celestial Asia Securities in Hong Kong.

The Dow Jones Industrial Average fell 1.51 percent to 10,769.74 and the Nasdaq lost 1.95 per cent to end at 3,644.91 on Wednesday. In Tokyo, the Nikkei ended 2.14 per cent weaker at17,031.63, with bellweather Sony Corp down 2.38 percent to 11,490 yen.

London and other European markets were expected to mirror Wall Street’s weakness and follow Asian bourses lower. The FTSE 100 closed 122.2 points or 1.9 percent lower at 6,196.2 on Wednesday.

Trading in Asia was complicated by news of changes in the MSCI series of emerging markets index weightings, a benchmark for fund portfolios which control hundreds of billions of dollars worldwide. Hong Kong’s Hang Seng Index ended the morning 3.47 per cent lower at 14,313.73.

This was partly due to the shock removal of blue-chip CheungKong from the MSCI Hong Kong index, which was down 12 percent at one point as index-driven funds dumped the stock to adjust portfolio weightings. "There has been a massive outperformance among those stocks included in the MSCI and stocks that people thought would be dumped but weren’t have also bounced higher," said Ord Minnett dealer Richard Coppleson in Australia, where eight companies were added.