BOMBAY: Pivotals on Dalal Street plummeted on hectic offerings from both institutions and speculators March 13 following Congress party’s setback in the Maharashtra and Gujarat elections.
The Delhi Stock Exchange (DSE) also witnessed weak sentiment and the index fell by 8 points.
In Calcutta, speculators liquidated large holdings at pivotal counters to reduce pre-Budget risks, and in the face of increasing political uncertainty.
The crash on the BSE was triggered largely by ACC, Reliance and Tisco, and the Sensex tumbled by about 105 points to close the day at 3,410.11 points. The broader 100-share National Index also lost 41.18 points over its previous close of 1,704.31 points. The moderate cuphoria on the bourses over the last few weeks on the expectations that Congress would do reasonably well in Maharashtra, has now been replaced by an air of apprehension and caution. Market men fell that the ruling party’s recent poll reverses close on the heels of the setback in the December polls, may force the Rao government to seek a fresh mandate. And a mid-term poll would mean added political uncertainty.
The ruling party’s reverses are being perceived as a failure of the reform process. This, it is felt, will force the government to introduce several populist measures.
Market observers fear that many move towards populism would be seen as the derailment of the reform process and put off fresh FII investments.
Article extracted from this publication >> March 17, 1995
