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ENS ECONOMIC BUREAU
MUMBAI, OCT 13: Bullish Indian markets, led by Vajpayee's homecoming, were briefly shaken on Wednesday as the military coup in Pakistan raised the specter of a deterioration in Indo-Pakistani relations but the market soon bounced back and the Bombay Stock Exchange Sensex which fell 135 points initially regained major part of the losses and showed a fall of only 24.33 points.
The overnight developments in Pakistan threw the market out of gear in the morning session with share prices falling on sustained offloading by operators. Towards the end of the day, calm was restored and the market re-focused on hopes that the new government, sworn in on Wednesday, would speed up economic reforms. ``The swearing in of pro-liberalisation Yashwant Sinha, Murasoli Maran and others also boosted the sentiment,'' said BSE broker Pawan Dharnidharka.
The benchmark Sensex closed less than half a per cent lower, at 5,032.99 points, down 24.33 points from Tuesday's close, recovering from an early loss of 135 points. The50-share National Stock Exchange index (S&P CNX Nifty index) gained 0.87 per cent to 1,496.75 with investors taking up fresh positions at the start of account there. The market had gained over seven per cent in the previous four consecutive sessions and topped the psychological 5,000 point mark to a record close of 5,057.32 on Tuesday.
``It was a quick retrieval. The market fell too much, too soon and that kind of reaction was uncalled for," said Purvesh Shah, chief dealer at KJMC Capital Market Services. "The weak speculators sold out, but most leading stock shave very attractive valuations, so the market will bounce back," he said. A statement by Defence Minister George Fernandes that he saw no unusual activity on the borders with Pakistan helped calm nerves, prompting return of bulls in the mid-session.
Dealers said caution related to the Pakistan military coup would remain till there was clarity on how the situation was likely to develop, but the bullish undertone of the market would help it resistany major losses. "People don't want to sell in a panic because of this, there was hardly any institutional selling," said a dealer with a foreign brokerage.
Focus was likely to shift to the economic policies of the new government of Prime Minister Atal Behari Vajpayee which was sworn in on Wednesday, dealers said, adding that the market was happy with the return of Sinha and Maran. ``The underlying tone continues to be very bullish. But when you have uncertainty like this, when it is very hard to take a call on the impact this will have on India, there is bound to be nervousness," said Sanjeev Sanghvi, chief dealer with HSBC Securities.
``I think over medium to long term the market is going to discount what is happening in Pakistan," said Nikhil N Khattau, CEO of Sun F&C Asset Management. Most analysts said the Pakistan coup would prove to be no more than a hiccup for the markets and expected investors to re-focus on the incoming government's reform policies and on improving industry growthrates.
``Had the Pak development not taken place, Sensex would have gone up by 150 points today,'' said a fund manager. Even then many scrips like Ranbaxy, Pentafour Software, Satyam Computer and DSQ Software hit the circuit filter and trading was suspended as they crossed the 8 per cent permissible price rise.
In New York, the American Depository Receipts (ADRs) of Indian companies fell with software company Infosys Technologies Ltd bearing the weight of the selling. Traders said the two Indian ADRs fell almost instantly when news of the military overthrow of Prime Minister Nawaz Sharif hit US television and dealers' screens.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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