The Hindu Business Line : PSU counters suffer steep fall

THE markets continued to reel on disinvestment blues as the BPCL - HPCL disinvestment were put on the backburner by the Cabinet Committee on Disinvestment by three months late last week. That, alongwith the possible strike by the US on Iraq, added to the tensions and kept the BSE Sensex on a tight leash.

The BSE Sensex closed the week at 3098.94 points, 42.17 points (or 1.34 per cent) higher during the week. Through the week, the absence of FII support led to the PSU stocks suffering a steep fall. Top on the list were the two refinery majors - BPCL (Bharat Petroleum) and HPCL (Hindustan Petroleum) which dipped by over 20 per cent during the week. Adding to the raucous voices of oil and mining ministries, there was opposition from the Fertiliser Ministry to the disinvestment in Rashtriya Chemicals during the course of this week. Almost all the prominent PSU stocks such as ONGC, IOC, Nalco are expected to remain under pressure for some time to come.

There was some amount of reallocation of portfolios with funds shifting from PSU stocks into software, cement and auto sectors. In the software sector, Wipro attracted heightened market activity and a sharp rise in prices during the week on rumours that the company had bagged a huge order. This was later denied by the company and that promptly led to the stockprice declining sharply. The second-rung software stocks such as Mastek, Polaris, Aftek Infosys and Hexaware Technologies continued to rise during the week. Hexaware Technologies continued to rule the roost with the stock appreciating by over 33 per cent during the week on the back of the Rs 110-crore order bagged in late August. This order is to be executed by December 2004.

The cement stocks attracted market fancy during the week on the hike in prices at Mumbai and further expectation of hikes as the construction activity are expected to pick up after the monsoons. One of the biggest gainers was Gujarat Ambuja Cements, while L & T, Grasim and India Cements rose modestly. Similarly, the auto sector (riding on the boom in commercial vehicles segment) continued to bolster market interest.

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