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Wednesday, May 12, 2004

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Quick exit for profit booking

THE counter of recently listed Ramakrishna Forging fell sharply on Tuesday. Stock price of the company was down 15.72 per cent, at Rs 36.20, on the BSE with volumes of 4.24 lakh shares; on the NSE, it was down 15.05 per cent, at Rs 36.40, with volumes of 8.18lakh shares.

Dealers said the sharp fall in the stock price was mainly due to panic selling by players who had bought the shares after it got listed. The stock of the company listed at Rs 40.

The talk is that several players who had subscribed the IPO through borrowed funds also sold on Tuesday, as they wanted to exit with some profits due to uncertain environment due to the elections.

The company issued shares at Rs 20 per share.

PSUs bear the brunt

WITH the possibility of hung Parliament looming large, the Government-owned companies were the worst affected on Tuesday. This was seen from the sharp fall of the BSE-PSU index, which fell by 5.16 per cent, the biggest fall on Tuesday compared to other indices.

Dealers said the fear in the market is that if there were instability in the Government, some of the measures such as disinvestments of PSUs would be affected. Moreover, issue of subsidy on oil is also concern and this also resulted in selling in most of the oil PSUs.

Among the PSU stocks that saw sharp fall were IOC (down 9.88 per cent at Rs 461.45 on the BSE), GAIL (down 7.04 per cent at Rs 201.30), HPCL (down 8.87 per cent at Rs 418.90), BPCL (down 8.33 per cent at Rs 413.40) and ONGC (down 2.15 per cent at 827.25).

The selling in these counters was mainly from high net worth individuals and FIIs.

Bump from emerging redemptions

THE fall in the Indian market and other Asian emerging markets are causing jitters in the global markets. The market talk is that fall in the emerging markets is due to heavy redemptions in some of the big emerging market funds.

Dealers said the heavy selling in index stocks is coming from them as the investors in these funds are pulling out money.

In the case of India, the redemptions seem to be slightly higher due the uncertainty over the outcome of elections and possible slowdown of Chinese economy.

The buzz is that the redemption in the Asian emerging market is in the region of $300-400 million.

Virendra Verma

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