How the Sensex stayed afloat in a fluid state

Monday, November 24 1997

How the Sensex stayed afloat in a fluid state

Sanjay Sardana

But for ITC, HPCL and Hindustan Lever, who together command an index weight of around 27.5 per cent, the Sensex would have seen a further erosion in values. The over 6.5 per cent surge in prices of ITC and HPCL on Friday restricted the damage on account of the on-going political turmoil and weak South-east Asian markets.

The 70-odd points recovery in the last two sessions of last week was led by the troika of these scrips. The ITC counter witnessed hectic activity last week ahead of its first half results. The surge in ITC's scrip from Rs 492 on Wednesday to over Rs 540 was aided by the 68 per cent growth in net profit to Rs 301.73 crore for the first half ended September, 1997. ITC's turnover too improved by 8 per cent to Rs 1434.92 crore against Rs 1329.11 crore in the first half of the previous fiscal.

Hindustan level's scrip, after the merger with Brooke Bond, commands an index weight of around 14.9 per cent. While ITC enjoys a weightage of around 7.5 per cent, HPCL's has a weightage of over 6 per cent.

Although Mahindra & Mahindra and Glaxo were also among the major gainers on Friday, these scrips have a relatively low weight of around 1.85 and 1.20, respectively in the Sensex. Thus, their contribution to the 56-point gain in the BSE Sensex was not substantial.

On Friday, only seven scrips witnessed an appreciation of over 2 per cent while another seven showed a substantial decline in value. Other scrips remained lacklustre.

At the same time, other heavy weights like Reliance, MTNL, State Bank, Telco and Bharat Electricals (commanding a weight of around 32 per cent) moved in a narrow range and hardly contributed to the marginal recovery on the last two days of previous week.

Interestingly, the market mover, Reliance Industries has in fact shown a marginal drop in the last two trading sessions with the scrips falling from Rs 158 on Wednesday to Rs 155.75 on Friday.

Others too have shown negligible appreciation. The 10 per cent rise in net profit failed to perk the sentiment in State Bank of India with the scrip clocking a marginal gain of Rs 4 to Rs 243 in the last two days. MTNL, with a weight of 7.47 per cent, ended with a meagre gain of Rs 3 at Rs 221.75.