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Plans to Privatize Large Indian Firms Expected  to Cause Further Surge in Stock Markets

Private and state-owned companies in India plan to raise billions of dollars through new offerings on the Indian stock markets this year.

The rush to offer shares in the capital market is being led by the Indian government. It wants to raise more than $3 billion from sales of its holdings in seven state-owned companies by the end of March.

These include India's largest gas transmission company, the Gas Authority of India Limited, and the nation's biggest gas exploration firm, the Oil and Natural Gas Commission. The government is making ten percent of the shares of each company available to the public.

The sales are part of the government's plan to privatize some of the country's largest state-owned firms. India began dismantling its old socialist-style economy 13 years ago, opening up many sectors to private investment.

Several private companies have also announced plans to raise capital on the markets during 2004. They include India's largest information technology firm, Tata Consultancy Services.

Stock market analysts estimate that nearly $10 billion worth of these new shares will be in the pipeline in 2004. They are calling it the "nation's biggest equity bazaar."

Indian stock markets surged by more than 70 percent last year. Rajesh Jain, Director at a brokerage firm, Pranav Securities, says the boom triggered new interest among foreign investors in the Indian stock markets.

"Overall the sense and the mood we get in the market is that India is an economy which is being watched with a lot of interest and this is one emerging market where global fund managers are seeking to invest," he said.

Foreign investors pumped about $7 billion into the Indian stock markets last year - nearly ten times the amount of 2002.

Stock market analysts are warning that the huge number of new shares could depress stock markets in the short-run. But they say there is optimism that the Indian economy will continue to be buoyant.

Economic growth in the financial year ending March is expected to touch about eight percent - nearly double what it was last year. Economists say this is the result of a simultaneous revival in the services, manufacturing and agricultural sectors.