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Rumours fuel markets' roller-coaster ride; Sensex oscillation covers 216 points, closes 74 points down at 4717.74

The stock markets witnessed volatile trading through the day.

The premier bourse, the Bombay Stock Exchange, went on a roller-coaster ride on rumours related to the state-controlled financial powerhouse, the Unit Trust of India, India's largest mutual fund.

The Sensex resumed its upward swing in morning trades following sustained speculative buying and fresh selective purchases from foreign institutional investors. Soon after, it surged past its all-time intra-day high of 4810 of July 15, 1999 to touch 4826.07. On Tuesday, it posted a record close of 4792.

Dealers recounted that the Sensex opened at a record high level of 4813.75 points. Marketmen said that the Annual Report of the Reserve Bank of India, which predicted a GDP growth of 6-6.5 per cent, had a positive impact on the market.

Rumours surfaced during the midsession that fresh media exposures are likely about the UTI's alleged misdeeds, indiscretions and questionable practices. Another rumour was about Ranbaxy Labs, that the recent spectacular rise in its share price will be investigated by SEBI. Ranbaxy's scrip rose last week following reports that it has struck a deal with an MNC for a drug delivery system. There were also fears about the sustainability of the Rs 23-billion net long positions developed so far in the bull rally.

These rang alarm bells in the buoyant BSE and made speculators jittery, leading them to square off positions.

Within no time, the Sensex crashed to 4600 level. It recovered towards the close and was at 4717.74 points, down 74.36 points or 1.55 per cent from Tuesday record close.

At the National Stock Exchange, the S&P CNX Nifty closed at 1375.85, down nine points or 0.64 per cent. Its intra-day high and low were 1406.65 and 1342.15 points respectively.

The foreign exchange market was steady. The rupee moved in a very narrow range on dull trading sentiment.

The rupee closed unchanged at 43.52/5250 against the US dollar in the inter-bank forex market.

However, the forward premia hardened. The six-month premium closed at 4.84 per cent and the one-year premium at 5.10 per cent.

The 25 basis points interest rate cuts effected by the US Federal Reserve affected key Asian stock markets which closed lower on Wednesday. This, in turn, had an indirect bearing on the sentiment in Indian stock markets.

The Federal Reserve's policy-setting committee raised the federal funds rate on Tuesday and the discount rate by 25 basis points to 5.25 per cent and 4.75 per cent, respectively. The markets across the world had been anticipating the move.

In Bombay, the rise and subsequent fall of the Sensex was mirrored in individual equities. Index-based and B1, B2 scrips on the BSE tumbled due to off-loading pressure from punters.

However, heavyweights like Infosys Technologies and Hindustan Lever were untouched by the crash. Infosys ended Rs 115 higher at Rs 5,640, while Hindustan Lever closed Rs 30 higher at Rs 2,630.

Other scrips in infotech, pharma and FMCG sectors became casualties of the fall. Pentafour Software ended Rs 34 lower at Rs 601 and Ranbaxy Labs ended Rs 52 lower at Rs 997.

Tata companies, too, fell on account of profit-booking. Telco ended Rs 16 lower at Rs 300, while Tisco ended Rs 9 lower at Rs 153.

The BSE-100 index ended 43.08 points lower at 2120.98 from the last closing of 2164.06. The BSE-200 index ended 10.35 points lower at 488.03. The Dollex and BSE-500 indices closed four and 32.04 points lower at 186.70 and 1445.91 respectively.

The total turnover on the BOLT network was Rs 27.64 billion from trading in 127.1 million shares.

L&T topped the turnover list with Rs 2.7 billion followed by Ranbaxy Labs (Rs 1.70 billion) and SBI (Rs 1.56 billion).

Other stocks that recorded a high turnover were Tata Tea, Satyam Computers, Reliance, Telco, ITC, Zee Telefilms, ACC, Digital Equipment, BHEL, Tisco, Infosys Technologies and Bajaj Auto.

Compiled from Indian media reports / UNI

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