Market expects huge selloff; ADRs dip
Market expects huge selloff; ADRs dip
The proposed restrictions on participatory notes (PNs) are expected to trigger a sell-off by hedge funds, and other short-term players, experts said. As a result, the Sensex, which has risen nearly 35 per cent in the last two months, may also feel the heat when the markets open on Wednesday morning.
Indications from the kerb (unofficial deals) and the fall in Indian share prices in the US markets suggest that the NSE’s Nifty Index may open at a discount of at least 150 points from today’s closing of 5,668.05, said dealers.
At 9.45 pm, Dr Reddy’s Lab ADR was down 5 per cent to $15.25, HDFC Bank was down 6 per cent to $111.34, ICICI Bank nearly 4 per cent to $53.32 and Infosys was down 5.8 per cent to $48.02.
Hedge funds, which account for at least 30 per cent of PN issuance, may be the first ones to exit, said dealers.
When restrictions were proposed on PNs on January 22, 2004, the Nifty closed 3 per cent lower to 1,770.
Former NSE Chairman R H Patil said, “The market is being manipulated right now and a bubble was growing rapidly. Although the Sebi proposals are late, they would help avoid a greater disaster. It is very important to know the identity of foreign investors, who have been manipulating this market.”
