The BSE benchmark Sensex failed to maintain the initial gains due to heavy profit booking mainly in banking and IT sectors, despite fag-end buying in oil and gas sector, driven by a hike in petrol prices.
In a major decision to bring petroleum products in line with market rates, the Central Government decided to deregulate petrol prices, hiked diesel prices by Rs two a litre, cylinder by Rs 35 and kerosene by Rs three per litre.
The price hike and decontrol move fuelled a strong demand for oil stocks, mainly of public sector undertakings (PSUs), cushioning the Sensex fall to a large extent. Banking stocks fell on expectations of rate hike, while metal counters suffered losses, as prices dropped on the London Metal Exchange (LME).
Early in the week, the 30-share Sensex rose sharply to hit a 10-week high at 17,919.62 on heavy buying in metal and realty counters. Metal stocks were at the forefront on the back of smart rally in metal prices on the LME. Along with smart rise in global stocks, higher advance tax payments by some Indian major firms for the first quarter (April-June) of FY'11 also supported the market sentiment.
However, heavy profit-booking, mainly in metal and IT stocks, in the later part of the trading days pulled down the index to 17,546.73 before it ended the week at 17,574.53 as against the last weekend's level of 17,570.82, a mere gain of 3.71 points, or 0.02 per cent.