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Monday, July 30, 2001

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Bear pressure on Lyons Range

By A Special Correspondent

KOLKATA, JULY 29. Share prices on the Calcutta Stock Exchange suffered yet another shake out last week under the weight of fresh bear pressure which found buyers virtually absent. Volumes drifted appallingly reflecting the general mood of reluctance to pick up new lots both on behalf of investors and speculators. The opening session was marked by a day's token strike by brokers in protest against the new trading norms put in place by the Securities and Exchange Board of India with effect from July 2.

Volumes dipped appreciably and telecom scrips such as VSNL, Sterlite Optical and Aksh Optic Fibre were among the worst hit. Along with the erosion in leading shares the indices also lost ground to a considerable extent as the week finished with CSE's 40-share index marked down to 1718.22 points from 1764.47 points. The sensex had also posted marked losses influencing the sentiment in Calcutta.

The downward trend in prices was noted on a steady basis almost throughout the week and on Thursday there was a sharp decline in old economy majors reflecting sustained selling. This development was attributed to apprehensions that the ongoing slowdown on the economic front might have its deleterious effects on earnings of companies in the old economy group. The final day's session witnessed a modest revival of support in selected shares but the index weighted scrips continued to stay bearish with the result that the indices finished in the minus territory.

Hindustan Lever provided a feature attracting brisk support in the early part of the week which lifted it up to Rs. 222.40 from Rs. 212.00 and though profit taking erased top marks, the close showed on balance gains at Rs. 216.30. Another bright spot in the sinking lists was provided by Ranbaxy which closed at Rs. 528.50 against Rs. 521 previously reflecting moderate buying interest. Elsewhere in the list losers dominated both the new and old economy counters because of the repeated bouts of selling.

State Bank of India, Tata Steel, Telco, ACC, ITC, Reliance Industries and a host of others finished well below the closings of the previous week. Tata Tea was depressed finishing at Rs.156 against Rs.169.70 because of disappointing results brought out by the company for the latest quarter. The price trend on the final day of the week was also far from encouraging in that losers out numbered gainers because of the overwhelming tendency on the part of hoarders to cut down their commitments.

Marketmen in general felt extremely despondent at the state of affairs currently prevailing in the bourses. Buyers, both institutional and individual, are absent providing for a substantial decline in volumes as well as values of shares. Most of them felt that despite the substantial fall in leading shares over the past several sessions not much of an encouraging comment was forthcoming from the authorities towards helping the capital market to regain its vibrancy. This has unnerved the operators who were by and large reluctant to effect new commitments. The investors are also adopting a wait and watch attitude with the result that volumes dipped markedly.

The industrial scenario is far from encouraging in that the industrial growth rate had moved into the negative area with little or no sight of an early recovery in evidence. There was also urgent need to implement development schemes aimed at improving infrastructure facilities. This is a must if the economy is to pick up, a leading operator said. With the progress of monsoon so far this year being highly satisfactory, there is renewed optimism of larger crop harvesting. This in turn will release substantial demands from the rural sector to a variety of industrial products. Thus helping the economy to a considerable extent.

But sources pointed out that unless measures were initiated specifically to provide a boost to the capital market, nothing much can be expected in regard to a reversal of the down trend in the bourses. The main stay of the market - support from foreign institutional investors - has also of late shrunk. At the same time purchases on behalf of domestic institutions remained woefully poor. With major problems confronting the country's largest investment institutions, Unit Trust of India, there is very little hope of major support forthcoming from this body until it sets its house in order.

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