Search the Internet          Tips  Sites: Finance, Investment

Battered Bombay shares may fall further

Shares are set to fall further this week as investors flee the technology sector and the intense volatility over the last two days increases nervousness, analysts said.

The 30-stock Bombay Stock Exchange Index, which slumped to seven-week lows of 4095.16 last Friday, is seen opening down on Monday.

Adding to the gloom of Nasdaq hitting 26-month low on Friday, are media reports of a probe into the dealings of leading brokers across the country.

Indian newspapers reported on Sunday that stock markets regulator Securities and Exchange Board of India (SEBI), is probing the sudden over-150 point slump in the index in the last two days of the week, coming after a budget that was widely considered investor friendly.

SEBI believes that the fall was triggered by concerted selling by bear cartel based on inside information, the newspapers added.

Analysts said the reports, coming in the wake of sustained weakness on the Nasdaq, could make investors more nervous.

"Markets are likely to remain mixed and volatile next week," said broking house Pranav Securities in a report dated March 2.

The Nasdaq carved out a 26-month low on Friday dropping 3.01 per cent to 2117.63.

SLIDING AWAY

Technology stocks, which bore the brunt of the falls last week and are seen tracking the Nasdaq.

Infosys Technologies, India's second-largest software company by market cap, tumbled over 13 per cent to a 14-month low of Rs 4939.85.

Satyam Computer Services Ltd, the country's fourth-largest software exporter crashed 16 per cent to a 15-month low of Rs 262.65. The two stocks, with a weightage of over 13 per cent, were partly responsible for the index slumping by 4.13 per cent.

Wipro Ltd, India's most valuable company fell 14 per cent to its lowest close since October last year of Rs 2078.95.

"Last year around the same time, investors were not concerned with valuations of technology stocks. Today, they just want to exit the sector," said Nilesh Shah, portfolio manager with Kotak Securities, a Goldman Sachs affiliate.

The Bombay Stock Exchange IT index has fallen 16.9 per cent since January this year.

OLD ECONOMY VALUE

Amidst the gloom, fund managers are sifting through a range of investment options among old economy stocks that look like giving value over the long term.

State-run companies, much maligned as a relic of the country's socialist economy, have found flavour in recent months and their rally will continue as the government prepares for stake sales in some leading companies.

Finance Minister Yashwant Sinha set a target of Rs 120 billion to be raised through sale of government stakes in the new financial year 2001-02.

Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation, India's second and third-largest state-run refiners by capacity, Mahanagar Telephone Nigam Ltd and Videsh Sanchar Nigam Ltd, India's overseas telecom monopoly are considered among the likely candidates.

Hindustan Lever, India's second most valuable company, is bouncing back after nearly a year in the wilderness.

The stock has outperformed the Bombay index since January rising 12.43 per cent versus a gain of 3.09 per cent for the index.

Better-than-forecast 2000 results, benefits from the budget and an ongoing restructuring programme are likely to further strengthen the stock in the coming months, analysts said.

The stock of Nestle India, subsidiary of Nestle SA, the world's largest foods company, will be in limelight as its board meets on Wednesday to consider 2000 results.

Tell us what you think of this report