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Krishnan Thiagarajan

ALTHOUGH the tension on the Indo-Pak border eased, the depressed state of the US markets appears to have haunted the Indian stockmarkets this week.

Fuelled by major selling pressure from the institutional investors - both FII and domestic, the 30-share Sensitive Index declined by 69.32 points (or 2.09 per cent ) to close for the week at 3242.75 points. There was sustained selling pressure by foreign institutional investors with this segment remaining net sellers through the week. The weakening dollar, the profit warnings by different companies in the US - specially in the technology sector and recurrent turmoil in the Middle East continued to cast a long shadow over the performance of the Dow Industrial Average and Nasdaq Composite Index.

Haunted by a combination of factors, Dow plunged to its fifth consecutive week of losses. The trend of questioning the corporate practices of leading companies continued, with Merck's financial statements being placed under the microscope. Though the technology sector bore the brunt of the losses, the non-technology stocks also did not fare any better. The weakness of the dollar in particular had been responsible for the major shake-up in the investor confidence in the US markets.

While the Dow declined by 2.3 per cent, Nasdaq and Standard and Poors 500 dipped by 4.3 per cent and 1.8 per cent respectively. And the ripples of this loss of investor confidence were felt in the markets worldwide.

The technology sector was mauled at the bourses as signals from the beleaguered technology sector continued to be dismal. The ambivalent outlook for the technology sector from Oracle and poor visibility from other sectors such as chip, wireless and networking and software markets took a toll on the sector as a whole. This was further compounded by profit warnings from some technology majors in the US.

This uncertainty led to the software stocks of all hues - frontline and second rung stocks taking a knock in the domestic markets. Infosys Technologies despite bagging a major overseas order and announcing a merger with the banking unit of US based IQ Financial Systems witnessed a sharp erosion in its price. The other software company which lost value during the week were Wipro,. HCL Technologies, Polaris Software, Aftek Infosys and Tata Infotech among others.

Apart from the software stocks, the media stocks witnessed weak price trends while the stock performance of telecom stocks were mixed, with MTNL and Hughes Tele logging appreciation. With Tata Teleservices announcing that its merger talks with Hughes Tele.com were at an advanced stage, the stock witnessed some marginal activity. .

Among old-economy industries, buoyant interest was seen in the auto, steel, paper industry stocks. However, the PSU stocks which have had a good run over the past few months on the disinvestments fever suffered for the second successive week. A somewhat mixed trend was also in evidence among banking, engineering, cement and pharma stocks.

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