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India shares' declines seen arrested

BOMBAY: Indian shares are expected to halt their run of losses this week as after five consecutive weeks of declines they appear reasonably priced and are likely to be attractive to investors once again, analysts said.

But whether they show a sharp recovery would depend mainly on the state of the markets overseas and emergence of sizeable buying by foreign funds, they said.

The bellwether 30-share index of the Bombay Stock Exchange (BSE) fell 3.76 percent or almost 200 points to end the holiday-shortened last week at 5,102.41 on Thursday.

The index is now 14 percent down from its all-time closing high of 5,933.56 on February 11 but up 1.9 percent in the current year.

A widespread sell-off in technology shares, mirroring a weak Nasdaq, dampened sentiment severely and unwinding by speculators ahead of a long weekend caused the slide.

Indian stock exchanges were shut for trading on Friday due to the Moslem Eid al-Adha holiday and are closed on Monday for the Hindu 'Holi' festival of colours.

"With local markets shut on Monday as well, next week's tone will be set by the U.S. markets," said a vice-president at a U.S. brokerage.

U.S. stocks roared on Thursday as positive inflation news eased concerns of interest rate hikes, lifting the Dow Jones Industrial Average a record 499 points, or 4.93 percent, to 10,630.60. On Friday, it was down to 10,595.23.

The Nasdaq composite on Friday added another 1.71 percent to Thursday's 2.94 percent gains. It ended Friday at 4,798.13.

The Nasdaq fell 465 points from Monday before the partial recovery on Thursday.

Foreign institutional investors have slowed their purchases of Indian equities. They were net buyers of $68.1 million in March compared to purchases of $619.8 million in February.

ECONOMY-RELATED STOCKS POST GAINS

While the technology sector suffered last week, economy-related shares posted substantial gains which some analysts said will continue.

"The way they have fallen after the budget, economy stocks are looking very good at these levels," said Milind Karmarkar, head of research at Dalal & Broacha Securities Ltd.

Automobile companies like Bajaj Auto and Tata Engineering & Locomotive Company rose over 10 percent last week while consumer goods firm Hindustan Lever Ltd soared 25 percent.

But computer software firms Infosys Technologies and Satyam Computer Services fell over 25 percent. Cyclicals had fallen sharply in March due to new tax measures in the 2000/01 (April-March) budget.-Reuters