Receding War Fears Spur Late Recovery

The market ended slightly lower on Friday, recouping the day's earlier losses after defence minister George Fernandes dispelled fears of an imminent war with Pakistan.

The BSE 30-share sensitive index (Sensex) ended 10.16 points lower at 3,125.73. The S&P CNX Nifty index lost 3.35 points at 1,028.80.

Losers outnumbered gainers 670 to 541, with volume down to 9.7 crore shares from Thursday's 10.87 crore shares.

The market opened weak, but recovered from the lower levels in afternoon trades after the defense minister said at a press conference in Singapore today that there was no immediate cause for concern in the tense tussle with Pakistan, and described the situation at the border as stable.

 

According to a dealer from an Indian brokerage firm, "There is uncertainty, but the defense minister's comments were reassuring and infused some confidence into the market."

Market men felt tensions at the border may ease following persuasion and pressure from the international community.

The US said it was sending defence secretary Donald Rumsfeld to India and Pakistan next week to step up diplomatic efforts to avert a war in the region.

Analysts said the market is hoping that international diplomatic efforts will avert an armed conflict.

Kashyap Mehta, head-equity sales at Moneypore.com said, "Next week the outlook should be positive. The stocks have bottomed out and are steady at lower levels. There could be a maximum 10 per cent downside in most pivotals, barring the eventuality of a war."

Mehta added that supply to a large extent is being absorbed in technology and overall the valuations have begun to look attractive. If the border tension wanes then the market is likely to see a rise of 100-150 points in the next couple of weeks.

Technology stocks pulled the market lower, while light bargain buying helped some market heavyweights to crawl up.

Infosys Technologies (down 4.81 per cent to Rs 3,382.05), Satyam Computer (down 1.20 per cent to Rs 221.95) and HCL Tech (down 0.09 per cent to Rs 221.65) fell on fears that war in the region may affect their business.

Pharma scrips such as Ranbaxy Labs was down 3.47 per cent to Rs 771.05, Cipla was down 2.10 per cent to Rs 989.35, Hindustan Lever slipped 1.49 per cent to Rs 184.85, Nestle India was down 0.80 per cent to Rs 511.85, while Colgate Palmolive was down 0.33 per cent to Rs 134.10.

Zee Telefilms (down 0.34 per cent to Rs 132.75) ended flat. The stock rose nearly 3 per cent earlier in the day after the company's board approved the hike in FII investment limit from 30 per cent to 49 per cent.

Reliance Petroleum, the country's biggest private-sector refiner, gained 2.16 per cent to Rs 23.65 and Reliance Industries, the biggest petrochemicals major, climbed 1.34 per cent to Rs 264.45.