The Hindu Business Line : Sensex down 112 points; Tata group cos shine

ON a day when the major stock indices fell, the shares of several Tata group companies rose on reports of Tata Consultancy Services' (TCS) plans to hit the primary market.

While there was buying interest in Tata group shares, overall mood remained bearish with BSE Sensex down 112 points. The index opened weak in the morning and fell further as the day progressed. At close, Sensex closed at 4832.71, down 111.93 points (2.26 per cent) and on NSE S&P CNX Nifty closed at 1508.45, down 36.30 points (2.35 per cent). The weakness in various Asian markets also affected the market sentiment.

Brokers and analysts said interest in Tata group companies emerged in today's trading on expectation that the holding of these companies in TCS will be unlocked after the listing. In addition, the group's IT companies were in the limelight on expectation of their synergies with TCS.

The group companies' stocks that gained in today's trading included: Tata Investment Corporation (up 9.92 per cent at Rs 204.45 on BSE), Indian Hotels (up 0.6 per cent at Rs 343.90), Tata Honeywell (1.17 per cent at Rs 353.60), Tata Finance (up 19.87 per cent at Rs 37.70) and Tata Tea (up 0.34 per cent at Rs 336.30).

The group IT companies' stocks that gained included: CMC (up 1.82 per cent at Rs 473.20), Tata Elxsi (up 3.47 per cent at Rs 102.90), Tata Infotech (up 7.05 per cent at Rs 374.20). But most of the stocks closed much below their day's high levels.

However, the group's leading companies such as Tata Motors, Tata Steel and Tata Power stocks were down in line with the overall market.

Mr V.K. Sharma, Head of Research, Anagram Stock Broking, said "The issue (TCS) will also be an over hang on the markets as Rs 5,000 crore or more would be drained first by selling existing stocks". But he said the issue would be positive for companies such as Indian Hotels, Tata Tea, which will get to disinvest their locked holdings in the company.

For group IT companies such as Tata Infotech, Tata Elxsi and CMC, he said "It will be largely be an exercise in the darkness as you never know what will be the ultimate fate. There is initial market chatter that the group IT companies may be merged. But till you know about the merger in the first place and the ratios in the second, there is no foolproof way of knowing their fate".

Overall mood in the market remained bearish at close. Brokers said there was heavy selling in the last one hour and this could lead to weak opening next week.

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