Market Report: Second-liners continue march as blue chips wilt

THE BUDGET may have subdued investment demand for blue chips but it has failed to blunt the stock market's appetite for second-liners.

As leaders wilted again yesterday, the rank-and-file were in fine form, with the FT-SE 250 index, introduced in September, hitting another peak, up 7.4 points to 3,133.3. It has climbed 21.3 since the Chancellor's speech as the blue-chip index has fallen 42.7.

One of the most astonishing features of this year's share performance has been the strong demand for second-liners and the tiddlers that are often on the fringe of the market.

There is a strong feeling that blue chips are fully priced but that the shares making up the FT-SE 250 index have yet to fully reflect the expected move out of recession. The demand for the tiddlers, neglected in recent years, has invariably indicated bargain-hunting among the walking wounded.

Some had hoped that the German interest rate cut would have pulled blue chips out of their Budget blues. But the reduction is not expected to have any immediate influence on UK rates, despite the strength of sterling. The surprise fall in unemployment had little impact.

The flow of company results produced few surprises. Guinness fell 17p to 468p, although figures were in line with expectations. United Biscuits, on figures and bid hopes, improved 10p to 398p.

Drug shares were again under the weather, with talk of US healthcare cuts continuing to erode sentiment. Glaxo Holdings tumbled 14p to 619p, its lowest for two years. SmithKline Beecham fell 10.5p to 437p and Wellcome 15p to 887p.

Government stocks were again firm. Water shares made further headway, drawing strength from yield considerations that have been emphasised by the Budget manoeuvres. Thames Water advanced 7p to 543p.

Most food retailers gave ground, apparently hit by cautious comments from Barclays de Zoete Wedd.

Argyll Group fell 12.5p to 362.5p and Tesco 9p to 243p. BZW believe supermarkets are finding it difficult to pass on food inflation to customers. But Asda climbed 1.5p to 75.25p, the highest since the Archie Norman-led revival started. Hoare Govett said the supermarket chain's February sales were up 7 per cent on the same month last year and told its clients to buy.

Among food manufacturers, Hazlewood Foods ran into selling, falling 7p to 180p.

Acatos & Hutcheson, the oil and fats group, eased 2p to 217p. Carr Kitcat & Aitken regard the shares as a 'recovery buy', forecasting profits of pounds 9.75m this year and pounds 11m next.

Marks & Spencer held at 349p, ignoring advice from Shaw & Co to switch into WH Smith. Smith fell 10p to 440p.

Storehouse was ruffled by a Hoare suggestion that profits be taken. The shares touched 200p but ended at 199p, up 1p. They may go lower today. Hoare is holding this year's forecast at pounds 43m but trimmed next year's by pounds 5m to pounds 65m.

The pub owner JA Devenish had another strong session as stories persisted that the Boddington Group pub chain planned another strike. Devenish rose 14p to 293p. The shares have climbed 30p this week. Boddies, which made an unsuccessful offer in the summer of 1991, gained 2p to 253p. It has a near- 20 per cent Devenish stake.

Spring Ram, the bathroom and kitchen group, was the session's main casualty, following the warning of reduced profits. The shares returned from suspension and in frantic and confused trading crashed 65.5p to 63.5p. There were trades at 50p and 100p. Seaq put volume at a remarkable 26 million.

Eurocamp, running camping holidays on the Continent, had another difficult session, falling 18p to 231p. Since the group warned that summer bookings were running 20 per cent below last year, the shares have fallen almost 100p. They were floated at 225p in July 1991.

Property shares were firm. with Hammerson's forceful run continuing. The ordinary shares reached 416p, up 8p. British Land, rumoured to be interested in bidding, was thought to be making a City presentation last night. BL gained 12p to 275p.

Troubled Speyhawk added 2p to 14.5p, helped by the Government's decision to use St Pancras as the London rail terminal for the Channel rail link.

Speyhawk has plans for a big development at St Pancras, including a hotel and shops.

Another struggling property group, Embassy, held at 6.5p as its Hong Kong supporters picked up 6.5 million shares, lifting their stake to 53.47 per cent.

Frogmore Estates improved a further 7p to 398p ahead of interim figures due on Monday.

Sage, the computer group, jumped 34p to a 594p peak following Jim Slater's recommendation in the Independent.

THE FT-SE 100 index drifted 10.2 points lower to 2,879.7, with the FT- SE 250 index gaining 7.4 to 3,133.4. Turnover reached 706.3 million shares with 33,629 bargains completed. The account ends on 26 March with settlement on 5 April.

DAVID CROSSLAND, Airtours chairman, may soon bounce back with an acquisition, having failed this week with his pounds 290m bid for Owners Abroad. There are strong rumours that Airtours, which raised pounds 49m of cash during the bid fight, is going to buy Co-op Travelcare, the 170-strong chain of travel agents. Travelcare would dovetail well with its 334 Pickford outlets. Airtours fell 7p to 323p.

SLEEPY KIDS, the animated cartoon group, jumped 6p to 33p as its potentially lucrative involvement with Budgie the Helicopter, a character created by the Duchess of York, continued to develop. The company has appointed First Independent Films, a subsidiary of HTV, the independent television group, to handle distribution of the Budgie video in the UK. It is likely to be on sale within a year.

HP BULMER, the cider maker, rose 4p to a 409p peak ahead of an investment presentation last night at the stockbrokers Carr Kitcat & Aikten. The family-controlled group, the UK's largest cider producer, achieved profits of pounds 17.1m last year and Carr's analyst, Martin Hawkins, expects pounds 19.7m in the year ending next month. For the following year he is looking for pounds 22.4m.