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Deprived of rate cut, Indian stocks lose ground

Indian equity markets continue to witness acute volatility during the week ended Friday.

business Updated: Feb 02, 2008 16:53 IST

Indian equity markets continued to witness acute volatility during the week ended Friday, with the mood swinging both ways, resulting in a key index losing over 120 points despite a major recovery in the final session.

Data available with the Bombay Stock Exchange (BSE) showed that its key 30-share sensitive index (Sensex) lost 127.24 points during the week at 18,233.42 points, compared with 18,361.66 a week ago.

While the index for mid-cap stocks shed 3.28 per cent, that for small-caps was down 3.31 per cent.

"The RBI's (Reserve Bank of India) decision to maintain a status quo on interest rates really dampened market sentiments," said an analyst with a brokerage based in Mumbai. "The market expected some good news after the rate cuts by the US Fed."

The US Federal Reserve cut interest rates for the second time in eight days on January 30 in a bid to stimulate the flagging American economy. The cut of 50 basis points came soon after a reduction of 0.75 per cent on January 22, raising expectations in India.

Trading began on a sour note on Monday when the Sensex declined 208.88 points, or 1.14 per cent, at 18,152.78 points. Tuesday saw the index take another hit of 60.84 points, or 0.34 per cent, following the credit policy review.

The next days were no different, but Friday saw the markets recover and gain 593.87 points, or 3.36 per cent, not enough to wipe out all the losses incurred during the previous sessions.

Among the main losers were Reliance Industries, down 2.6 per cent at Rs 2,541.65, ICICI Bank, down 4.88 per cent at Rs 1,197.75 and DLF Ltd, down 13.92 per cent at Rs 813.55. Hindustan Aluminium, however, rose 2.05 per cent at Rs 176.90.