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Krishnan Thiagarajan

THE hangover of the delayed privatisation plans of the Central Government and bearishness in the US markets continued to affect the stockmarkets in Mumbai.

Towards the latter half of the week, the sentiment was further depressed by the rating agency Standard and Poor's downgrading India's local currency denominated debt to junk status. This was in the light of the country's mounting debt burden and the vulnerable public sector finances.

The Government has downplayed the effects of the rating so far, but a combination of these developments appear to have dragged the BSE Sensex down by 74.59 points (or 2.40 per cent) to close at 3024.35 points.

The spillover effects of the derailed disinvestments programme affected stocks in the early part of the week. The PSU Index continued to decline, although the decline was relatively lower than the previous week. The petroleum majors, BPCL and HPCL and other stocks such as Shipping Corporation of India, ONGC and Nalco figured in the losers list. This was compounded by the fact that the US markets were crippled by a slew of profit warnings, the growing apprehension of an US- Iraq war and relatively weak economic data. The week, Dow, Nasdaq Composite Index and S & P 500 fell across the board. This led to almost all the frontline stocks such as Infosys Technologies, Wipro and Satyam Computers witnessing weakness in the Indian bourses.

The only exception was HCL Technologies which remained firm following its proposed inclusion in the S & P CNX Nifty in end October. The final blow came from the Standard and Poor downgrade of the local currency debt. The full impact of this, however, will be felt only during next week's trading and it may be significant to observe the FII investments emerging from this trend.

Among other sectors, the automobile, economically-sensitive sector and commodity sector continued to perform badly at the bourses. In the automobile sector, the two wheeler majors - Hero Honda and Bajaj Auto lost value. In pharma, Dr. Reddy's and Ranbaxy witnessed some weakness. Among individual stocks, the prominent loser during the week was Zee Telefilms.

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