A weakness in PSU stocks following disappointment over the delay in divestment of HPCL and BPCL, a surge in oil prices amid fears of an US-Iraq war and an oil strike in Venezuela, profit taking in IT shares due to weakness on the US bourses and profit booking in bank scrips affected the bourses today.
Select cement stocks, however, moved up on expectations of a cement price hike. Early gains were witnessed in some consumer goods and pharma stocks.
The barometer 30-share BSE Sensex rose 23.87 points to 3,374.13 by 11:17 IST. The S&P CNX Nifty fell 10.10 points to 1,088.25.
Oil PSUs HPCL and BPCL plunged in early trades amid much volatility. HPCL (down 6.7% to Rs 283.70) lost as much as 9.3% to Rs 276, earlier. Heavy volumes of 12.3 lakh shares were witnessed in just an hour of trading. BPCL slipped 4% to Rs 209.70, after slumping 7.6% to Rs 202 earlier. 4.4 lakh shares changed hands on the counter thus far.
A host of PSUs lost ground. The top losers were Hindustan Organic Chemicals (down 7.5% to Rs 18.95), Dredging Corporation (down 5.5% to Rs 283), HMT (down 4.7% to Rs 19.20), Shipping Corporation of India (down 4.3% to Rs 65.75), Engineers India (down 4% to Rs 276.55) and Nalco (down 3.5% to Rs 91.30) among others.
The Cabinet Committee on Divestment (CCD), which met on Friday, deferred its decision on setting a timeframe for privatising HPCL and BPCL pending the Attorney-General (AG)'s opinion as to whether the Centre needs the Parliament's permission to privatise the two oil PSUs, which were nationalised through a previous Act of Parliament.
Both HPCL and BPCL surged last week ahead of the CCD meet on expectations that the timeframe over their divestment would be drawn up.
Just recently, Oil & Natural Gas Corporation said that it requested the Ministry of Petroleum and Natural Gas to grant it permission to participate in the divestment process of HPCL.
On 9 December 2002, the government announced in Parliament that HPCL would be divested through a strategic sale and BPCL would be divested through the stock market route.
IT stocks fell prey to profit taking as a result of weakness in the US markets and following the sharp gains over the last few months.
Software bellwether Infosys Technologies (down 1.4% to Rs 4,699), Satyam Computer (down 1.5% to Rs 278.75), Wipro (down 1.5% to Rs 1,582.50) and Digital GlobalSoft (down 1% to Rs 619.50), all declined.
In second line IT shares, early losers included NIIT (down 3.4% to Rs 180.75), Vakrangee Software (down 4.6% to Rs 32.70), KLG Systel (down 3.5% to Rs 40.70), PentaSoft Technologies (down 3.3% to Rs 10.15) and Trigyn Technologies (down 3% to Rs 25.90).
In the past week, the Dow Jones Industrial Average fell 2.4% to 8,303.78, the S&P 500 lost 2.3% to 875.40 and the tech laden Nasdaq Composite index slipped 1.1% to 1,348.31.
US markets are dogged by concerns about weak corporate profits, a slow economic recovery and US-Iraq war fears.
A host of Old Economy stocks in sectors ranging from auto, pharmaceuticals, FMCG and banking to media were in the red.
Some of the market's recent star performers, PSU banks, retreated on profit taking. Dena Bank (down 3% to Rs 12.20), Andhra Bank (down 3.3% to Rs 20.10), Punjab National Bank (down 1.5% to Rs 68.75) and Bank of India (down 1% to Rs 36.65), all moved lower.
Auto major Telco slipped 1.5% to Rs 160.50.
Index heavy weight Reliance Industries (down 0.5% to Rs 296.55) recovered from the day's low of Rs 294. RIL is witnessing profit taking after the scrip surged late last week ahead of the much-awaited announcement on Friday of plans in the telecom and Internet space by group company Reliance Infocom.
Cement shares proved steady after gaining late last week - L&T (up 1.8% to Rs 210.85), ACC (up 1.7% to Rs 164.95) and Gujarat Ambuja Cements (up 0.99% to Rs 163.20). Market talk has it that cement makers may resort to a price hike in January 2003.
Eicher (up 5.7% to Rs 27.50) spurted after the promoters announced an open offer to acquire an additional 20% stake in the company with a view to consolidate their holding.
The offer will be made at Rs 30 per share which was at a 15% premium to Friday's market price of Rs 26 (the closing price of the scrip on BSE on Friday). The promoters already hold 60.79% stake in Eicher.
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