PSUs take a pounding

STOCKS REPORT

Spooked by news that the disinvestment programme will be put off by the new government, shares in public sector undertakings (PSUs) and banks received a severe buffeting yesterday.

The Bombay Stock Exchange's (BSE) PSU index crashed by 14.4 per cent, while the Bankex dived by 10.6 per cent.

Meantime, the BSE's capital goods index lost 9.23 per cent and the consumer durables index 6.40 per cent.

The 30-stock bellwether index, Sensex, slid by 6.10 per cent, or 330 points, to close at 5,069.87. It touched an intraday low of 5,043.99, 6 per cent, or 355 points, lower than the Thursday's close. The National Stock Exchange's (NSE) S&P CNX Nifty, too, plunged by 8 per cent to end at 1,582.40.

The breadth of the market was negative, with declines outnumbering advances by 9-to-1 on the BSE. All the Sensex stocks ended lower.

Foreign institutional investors (FIIs) went on a heavy selling spree today. They sold a net at Rs 604.40 crore on Thursday, and have been net sellers in May, so far, with outflows at Rs 2,148 crore.

Nandan Chakraborty, head (research), Enam Securities, said,"FIIs were big sellers today, with shares in PSUs, energy firms and banks coming in for special punishment. Volatility will continue till it is clear as to who will handle the key portfolios in the cabinet."

He added that the common minimum programme of the new coalition government will be crucial for further indications.

Market players said the selection of the prime minister, finance minister and other key cabinet members are key indicators and also the composition of the cabinet in terms of the parties involved. Most agree that the Left will be unlikely to pursue its own individual agenda but will in all likelihood slacken the pace of reforms.

Traded volumes were higher today. The turnover on the BSE stood at Rs 3288.12 crore on the BSE and at Rs 6968.57 crore on the NSE. Investors seem to be selling at all levels, worried that the privatisation programme and foreign direct investment could be hit by a shift to a leftist-backed government.

Shares in State bank of India, which was the biggest loser in index stocks, crashed by 14.77 per cent to Rs 514.85. MTNL followed with a 13.1 per cent fall to Rs 115.45.

Refinery stocks HPCL, down 12.81 per cent at Rs 331.35, and ONGC, down 12.47 per cent to Rs 722.55, also took a beating.

Other scrips falling more than 10 per cent in the Sensex basket included BHEL, down 11.09 per cent at Rs 499.90, Tata Power, down 10.51 per cent at Rs 323.25, and Bharti Tele-Ventures, down 10.25 per cent at Rs 143.60.

Reliance Industries skidded 6.77 per cent to Rs 476.80 and ITC lost 3.48 per cent to Rs 914.50. BPCL fell 13 percent to Rs 356.40, while Shipping Corp of India lost 17.68 percent to Rs 86.35.

In banking stocks, Punjab National Bank plunged 18.22 percent to Rs 263.90 and ICICI Bank fell 6.95 per cent to Rs 265.