Indian share prices are expected to be underpinned this week by growing confidence the market can absorb a series of share sales by the government, but some caution remains ahead of the country's biggest ever offering.
"We seemed to strike a temporary bottom last week," said Ketan Dedhia, managing director of Nalanda Securities. "But confidence is gradually reviving and people would take heart from increased interest in the public offers."
The 30-issue Bombay share index fell to a two-month closing low on Thursday as the market factored in some public share issues. The index fell more than three percent last week in choppy trade and is six percent down since February 18.
By Friday's close, an offer of shares in Indian Petrochemicals Ltd was oversubscribed three times. An offer by oil retailer IBP Ltd was oversubscribed one-and-a-half times and an offer from Dredging Corp of India was fully subscribed.
The ONGC sale, India's biggest ever, caution ahead of general elections between April 20 and May 10 and worries the government might try to curb market speculation could leave trading choppy this week as the different factors influence sentiment.
"There are concerns about the size of the issues, about liquidity and about the level of government intervention," said Nimish Shah, chief executive of Parag Parikh Financial Services Ltd.
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