Markets decline to pre-budget levels
22 March 2005
Weak sentiment prevailed in the market and the indices continue to weaken under all round selling pressure. Operators are getting out of positions built up after the budget as FII's remain in the sidelines. The indices declined to their lowest levels since January losing close to 2 per cent each. Sensex closed at 6635, down a massive 122 points and the Nifty at 2061, down 35 points.
Yesterday, US markets remained weak ahead of a Fed Reserve meeting today to consider interest rate revision. The market is expecting a hike in interest by 0.25 per cent but speculation that the Fed may indicate upward revisions of 0.5 per cent in future is making traders jittery. Dow lost more than half a per cent while NASDAQ managed to recover towards the end of the session and closed on a flat note. Oil declined marginally after ruling firm in morning trades. Indian ADR's had another bad day with ICICI Bank and HDFC Bank among the major losers. Wipro, Tata Motors, MTNL and Satyam all ended with loses. Infosys was the only one to manage a positive closing.
Public sector bank employees went on a nationwide strike today paralysing banking operations. Besides affecting trading volumes in the stock market, the opposition from employees to consolidation and FDI in the banking sector has dampened the market sentiment for banking stocks. Most public sector banks had appreciated significantly on speculation of mergers between smaller banks. Smaller private sector bank stocks had also moved up on expectations of higher FDI.
Infrastructure output index for February is down 0.3 per cent as compared to the same month of last year. Electricity generation, crude oil production and coal output declined even as steel output showed a marginal increase. For the current year till February the infrastructure index was up 4.6 per cent as compared to a growth of 6.5 per cent last year.
There was some positive news for the government as Left parties have decided to support the Patent (Amendment) Bill after its suggestions were accepted. They continue to oppose the legislation on pension fund regulation.
Banks were the major losers as PSU bank stocks were battered down and the bank stock index lost more than 3 per cent. There are unconfirmed reports that the prime minister's office is not in favor of consolidation in the banking sector. SBI lost more than 4 per cent while Punjab National Bank and Oriental Bank of Commerce were the other major losers. The weakness rubbed off to private sector banks like ICICI and HDFC as well.