The week began on a dismal note with the BSE 30 Sensex falling over 70 points on political jitters and following the arrest of two officials of Reliance Industries Ltd. The disappointments of the 2002-03 credit policy announced by the RBI on Monday also led to the sharp fall in the Sensex on Monday. The RBI on Monday announced a 50 basis point cut in the CRR to 5 per cent. However, the cut in CRR will be applicable from June 15, 2002. The disappointment in the market was that interest rate remained unchanged.
During the week, the Sensex lost 41.21 points to close at 3380.61 points on Friday, while on the NSE, S&P CNX Nifty fell by 28.15 points to close at 1096.95 points.
However, the markets made modest recovery in the later part of the week on bargain buying and renewed confidence in the government’s reforms process after the ruling party won a crucial parliamentary vote late on Tuesday. Most second-rung state-owned stocks rallied smartly during the later part of the week on hopes that the disinvestment process would not be hampered and will be done within the time frame.
Among the PSU stocks, Bharat Electronics, IPCL hit a 52-week high on the bourses. IPCL rallied smartly during the week on hopes that the bid for the 26 per cent stake held by the government will be very competitive. The three bidders for IPCL include Reliance Industries, Nirma and Indian Oil Corporation (IOC).
The better-than-expected earnings of Cipla and Digital GlobalSoft kept the stock firm throughout the week.
Shares of Castrol India ruled firm following reports that the Bombay high court had upheld a Sebi decision directing the UK-based oil major BP to pay 15 per cent interest to Indian shareholders of Castrol India for the delay in making open offer.
Dealers said, "Sustained selling by foreign institutional investors (FIIs) is causing apprehension in the market."For the first time in the calendar year 2002, FIIs were net sellers in the equity instruments to tune of Rs 101.70 crore in April 2002.
Dealers said that they expect market movement to be rangebound until violence in Gujarat abates and FIIs make renewed purchases.
Said a dealer at a domestic brokerage house: "Investors are also wary about investing in technology stocks following sustained weakness on the Nasdaq. A dismal quarterly performance in the quarter to March of most technology companies in US has led to a belief that the recovery pace in US is unlikely to be as fast as anticipated earlier.