Harshad Mehta Still Haunts Dalal Street

"The days of one man moving the market are over," Harshad Mehta had once stated in an interview. However, yesterday's incidents at the bourses only prove that his name still influences market movements, just as it did six years ago.

Rumours that Harshad Mehta's brokers are likely to default unnerved player sentiments at Dalal Street yesterday. More than selling pressure from foreign funds, the market crashed on fears of a possible payment crisis at the bourses arising from Harshad Mehta's inability to meet his financial commitments to his brokers.

Though exchange officials and regulatory authorities have categorically stated that there is no threat to the system, market players are jittery about the fact that all Big Bull stocks have crashed to the lower end of the circuit filters.

 

Fears of a payment crisis have deterred fresh buyers from venturing into the market, while it spurred even the smaller players to dump whatever little holdings they had.

Marketmen are divided over Harshad Mehta's financial state of affairs. His detractors claim that this could just be a trick to lure bears into going short at his favoured counters so as to trap them by pulling up the prices.

Others maintain that Harshad Mehta is not in any kind of trouble; neither are any of his brokers. The only players who are in trouble are those with huge positions at the BPL, Videocon and Sterlite counters, since they are not finding any buyers for these stocks.

Yet another theory doing the rounds is that the rumours are being spread by the bear cartel to destabilise these stocks which have held firm despite the falling market.

Says a market player: " Harshad Mehta has a knack of getting into trouble very often and yet managing to emerge out of it unscathed. This time won't be any different."

FIIs : Still a mixed bag

Selling pressure from foreign funds towards the fag end of the trading session further worsened sentiment. FIIs are reported to have been aggressive sellers at the MTNL and Larsen & Toubro counters. On Tuesday, the Emerging Market Investment Corporation is reported to have sold 3.5 lakh shares of L&T.

The Abu Dhabi Commercial Bank is reported to have sold around 32,000 HLL shares on Tuesday. On the same day, a US-based fund is believed to have sold around 60,000 shares of Carrier Aircon. Schroeders is reported to have sold around 15 lakh shares of SAIL on Tuesday, while they are also reported to have sold around 6 lakh shares of L&T and small quantities of ACC and NIIT shares.

However, there has also been some FII activity on the buying side. The Jardine Fleming Fund is reported to have purchased around 5 lakh shares of Reliance Petroleum on Tuesday. It is also reported to have picked up 1 lakh shares of ICICI Banking, while the Genesis Fund is reported to have purchased 70,000 shares of Corporation Bank.

Refinery stocks too shed some of their gains in yesterday's turbulent market. All key stocks, Cochin Refineries, HPCL and BPCL, closed lower than their previous closing levels. A leading foreign brokerage is reported to be aggressively recommending refinery stocks to its clients in current market conditions. Among funds, Capital International is reported to be a buyer at the HPCL counter. No (sale) again

Renewed speculative activity has been observed at the Nocil counter over the past couple of trading sessions. On Tuesday, trading in the scrip was frozen at Rs 36.10 after there were no sellers at the counter.

Yesterday the scrip went on to touch an intra day high of Rs 38 on the BSE, but fell to Rs 34 levels at close. On the NSE, it closed marginally higher than the previous day's close. Seems the counter is in for another round of rumours and denials as it has been in the recent past.