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UTI talk, Akali threat, Asian plunge hit Sensex hard; crashes 225 points to touch 17-month low, 2878.07

The crash of Asian markets in the previous week, coupled with possible redemption sell-off of Unit Scheme 64 by the Unit Trust of India caused panic in the stock markets, with the BSE Sensex closing at a 17-month low of 2878.07 by loosing about 224.22 points over the previous close of 3102.29.

At the National Stock Exchange, the S&P CNX Nifty lost by 64.20 points to 840.75 from the last Thursday's close of 904.95.

According to analysts, over 15-prominent scrips out of 30 of the BSE benchmark index declined by about eight per cent and hit the circuit breaks. The infotech shares like Satyam Computers, Pentafour Software also declined sharply.

Leading stock brokers attributed the fall to various reasons which include ongoing downtrend in the Asian markets, and newspaper reports that the country's leading financial institution, the UTI, is likely to resort to heavy selling in the wake of decline in the net asset value of US-64 scheme. The political uncertainty in view of the Akali Dal's threat regarding withdrawing support to the Union government pushed the market further down.

The 30-scrip BSE Sensitive Index or the Sensex opened higher at 3036.15 which happens to be the day's high, and fell below the psychological 2900 mark to touch the day's low of 2872.92, and finally ended at 2878.07 points, showing a net loss of 224.22 points against the previous close of 3102.29 points.

The broad-based BSE-100 index also declined heavily by 95.50 points to 1284.28 points from the last Wednesday's close of 1379.78 points.

According to BSE authorities, the Sensex recorded a fall of 300 points on March 31, 1997 when it closed at 3360.80 points from the previous close of 3663.53 (March 30).

Between 1994 and 1998, markets have recorded five tops above 4000 (4663 on September 1994, 4131 on June 1996, 4605 on August 1997, 4322 on April 1998) and major four bottom levels below 3000 mark (2967 on May 1995, 2820 on June 1996, 2713 on December 1996, 2951/2850 on June 1998/October 5, 1998).

Malini Sanghvi, a leading stock broker, said that market could touch further lows. ''Bottoming out is a process. We see the downside not exceeding five per cent to ten per cent. It is time for long time investors to start investing in phases,'' she said.

Last week, the bourses witnessed a furore over the UTI's flagship scheme US-64. The NA of this scheme had dipped below Rs 10 and the schemes reserves had turned negative to the tune of Rs 10.98 billion. As a result of this, the market was under pressure over a posssibility of large-scale redemption.

The UTI chairman raised both the sale and repurchase value of the US-64 by 15 paise on Wednesday. However, the market reacted negatively when it opened today after four holidays.

Vasudeo Joshi, assistant director at the Jardine Fleming Asset Management Company also attributed the fall to the weak trend in global market.

Joshi said that the downtrend will continue for quite sometime while Navin Agrawal, analyst at the SVS Securities said that the market is headed for another low level of 2750 in the coming days.

Meanwhile, the BSE-200 and Dollex indices closed lower by 20.51 and 7.78 points to 299.93 and 117.66 points from Wednesday's close of 320.44 and 125.44 points respectively.

According to a global depository monitor, Skindia Finance Global Depository Receipts Index of Indian companies listed at the international market also reported major decline on Monday. The average decline was recorded at 2.45 per cent.

Total turnover on the BSE clocked at Rs 15.07 billion. The tobbaco giant ITC topped the list of turnover by registering highest turnover of Rs 2.97 billion, followed by Satyam Computers Rs 2.86 billion, Zee Telefilms Rs 1.51 billion, SBI Rs 1.51 billion and Reliance Rs 912.7 million.

Hectic activity was witnessed at the other counters led by Pentafour Software (Rs 825.6 million), Hindustan Lever (Rs 345.4 million), Infosys Tech (Rs 334.2 million), Castrol India (Rs 257.6 million), Tata tea (Rs 256.6 million), Dr Reddy's (Rs 204.3 million), Bajaj Auto (Rs 180.8 million), L&T (Rs 174.4 million, ACC (Rs 164.2 million) and Digital Equipment (Rs 163.3 million). UNI