Fears Of Hung Parliament Hang The Market

Mumbai, New Delhi, April 27 | Updated: Apr 28 2004, 05:30am hrs
It was mayhem on the markets on Tuesday. The exit polls, which indicated the possibility of a hung Parliament, took their toll on the bourses, with the benchmark 30-share Sensex crashing 213 points. This fall, which saw Rs 54,474 crore being knocked off the market capitalisation, is the biggest in over three years.

The possibility of post-poll uncertainty cast a shadow on the markets, which fear that reforms may be a casualty in such a scenario. The market cap shrunk 4.25 per cent to settle at Rs 12,27,898 crore.

Opening at 5,868.33 points, the Sensex continued heading southward to close at 5,712.28 points, down 213.30 points, or 3.6%. The NSE index, the S&P CNX Nifty, plunged 75.20 points to close at 1,817.25 points.

Anup Maheshwari, fund manager-equities at DSP Merrill Lynch, said: Political factors are bound to impact the markets going forward. We are likely to see more oscillation in the near future. However, the fundamental story still holds good and we see the markets stabilising, post elections.

Jamshed Desai, head of research, IL&FS Investsmart, said: We are trading in a very emotional environment and any political news may impact the market. We are headed for considerable volatility.

Said NK Sharma, chief executive of IL&FS Mutual Fund: The fall is on account of the uncertainty on the political front. The markets are expected to recoup once the dust settles after the polls. The market wants a stable government so that the reform process continues.

PSU Blues
Fears that the disinvestment process would suffer in a major way if there was a hung Parliament resulted in stocks of PSUs being hammered. The BSE PSU Index was the biggest loser among sectoral indices, losing 215.51 points. Among the majors which were hit badly were BPCL (down 7.7%), HPCL (down 7.3%) and MTNL, which fell 9%.

The Pharma Buck
Pharma stocks, however, seemed to survive the onslaught, with the BSE Healthcare Index falling only 1.6%. Stocks like Ranbaxy, Cipla and Nicholas Piramal closed in positive territory on expectations of healthy results.