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UTI move sends stocks tumbling

Our Bureau

MUMBAI, July 3

SUSPENSION of sale/repurchase under Unit Scheme-1964 (US-64) by Unit Trust of India rocked the markets today.

Volumes remained subdued and values tanked further on the second day of the new system (rolling settlement and removal of individual stock circuit breakers) on the bourses.

Stock prices and the benchmark indices swung wildly due to the UTI debacle and panic selling in the index heavyweights. Stocks showed wild fluctuations as a major investor (UTI) remained largely absent in the rather shallow market with thin volumes.

Marketmen did not realise that suspension of sale/repurchases by UTI would ease the redemption pressure on it. Hence, UTI would not be under compulsion, as it was during May, to sell equities, thereby depressing values further.

UTI insiders said that by remaining in the sidelines, they may be able to recoup some of the losses as market adjusts itself to the new environment.

The drop in share prices of Reliance Industries, Infosys Technologies and Reliance Petroleum brought down the BSE-30 share sensitive index (Sensex) by nearly 90 points. Other losers were Satyam, ITC, L&T, Tata Steel, BHEL and Zee. The Sensex held ground with the help of rise in HLL and SBI which contributed nearly 16 points.

The Sensex closed at 3,312.29 losing 113.74 points over the previous close. At NSE, the S&P CNX Nifty closed at 1,069.80, losing 38.1 points over last close.