Sensex Plummets To Lowest In A Month At 5,618.15 Points

Mumbai, Feb 25: | Updated: Feb 26 2004, 05:30am hrs
The benchmark 30-share Sensex plunged 116 points on Monday to hit a one-month low on fears of liquidity crunch hitting the market on account of bunching of public offers, coupled with reports of probe into the dull response to the ongoing offers for sale by the government.

The battering on the bourses got further fuelled on account of negative foreign fund inflows in the first two days of the current week. The squaring of long positions in the futures market ahead of the settlement of February cycle also weighed on the market. Thursday is the last date of settlement for the February contract. The Sensex finished for the day at 5,618.15 points down 116.29 points after opening at 5,746.79 points, which also happened to be the days high.

On the National Stock Exchange (NSE), the broader 50-share Nifty lost 34.55 points to close at 1,786.80 points. While, the FE constituted FEfty ended the day at 2,025.59 points down 57.42 points.

Dealers said, the market continued to drift downwards in a thin volume, a indication that investors have adopted wait and watch policy till the wave of public offer gets over.

Rajesh Jain, executive director, Pranav Securities said: Along with the slew of public issues, investors are also looking at the clarity in many fronts like election, the corporate earning numbers etc.

On the ongoing offer for sales, Mr Jain said: The floor price fixed by the government has set some sought of benchmark for the scrips whose public issues are on or expected in coming days. Like in case of IPCL, the floor price of Rs 170 as compared to the market price of about Rs 210 (just ahead of the fixing of floor price) is an indication that this is the fair value for the stock. On the top of it retail investors are also going to get a five per cent discount to the cut-off price, Mr Jain added.

Dealers said, keeping an eye over the floor price, select investors are exiting from these scrips from the secondary market. The floor price set in these offers were at a discount of about 15 to 20 per cent to the market price (the market price just two days before the floor price was fixed).

Dealers said, the selling pressure intensified in the late trades after the disinvestment minister Arun Shourie said that the government will look into reasons for the dull response in the ongoing offers for sale.

The government on Wednesday also said that it had identified people responsible for pulling down stock prices and fixed the responsibility of financial advisors to motivate and inform the public.