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Weekly review: Sensex ends 6-month low...

The stock markets continued to be in correction mode during the volatile week under review due to a slew of negative global as well as domestic reasons.

business Updated: Mar 15, 2008 19:05 IST

Stocks: The stock markets continued to be in correction mode during the volatile week under review due to a slew of negative global as well as domestic reasons and the benchmark Sensex dropped further by 1.35 per cent to end the week at six-month low.

Lingering fears of recession despite a rescue package of $200 billion announced by US Federal Reserve, rising world crude oil prices to record peak and on local front, a steep fall in industrial growth and spiralling inflation upwards above the central bank's tolerance level of 5 per cent in the two straight week weighed on the bourses.

Had there not been a smart recovery in select blue-chip stocks after Finance Minister's positive statement on Friday, the losses in the indices were much more pronounced.

In the week to March 15, the 30-share Sensex dropped by 215.00 points to end the week at 15,760.52 from last weekend's close of 15,975.52. It gyrated in a wide range of 16,683.37 and 15,228.99 during the week. It had plunged by a massive 1,603.20 points or 9.12 per cent in the preceding week.

The 50-issue Nifty of the National Stock Exchange also moved down by 25.80 points or 0.54 per cent to end the week at 4,745.80 from last weekend's close of 4,771.60.

Traders said the markets surged after US Fed's Tuesday's announcement of a latest bailout package to the credit markets to salvage further damage of the world's largest economy.

But global weakness due to concerns over the efficacy of the US Fed's efforts to assist nervous credit markets and the feeble industrial growth in India pulled the Sensex sharply down to 6-1/2 month closing low of 15,357.35 in its sixth biggest fall of 770.73 points on Thursday.

The market turned around on Friday after Finance Minister P Chidambaram stated that he expected the economy to maintain growth levels above 8.5 per cent in the coming years and the recent turmoil was the only reflection of the global debacle.

He also tried to soothe fears by saying that government was ready to take any fiscal step to keep the prices under check. As a result, Sensex recovered by over 400 points. Hectic short-covering and good buying in select front-line stocks also helped to cushion the Sensex fall to some extent.

Standard & Poor's statement that the end of write-downs was now in sight for large financial institutions also had a sentiment on the market sentiment.

The industrial growth, as measured by Index of Industrial Production (IIP) nosedived to 5.3 per cent in January, from 11.6 per cent in the same month last year while inflation rose to over nine-month high at 5.11 per cent for the week ended March 1 as against 5.02 per cent in the preceding week, above the target set by the Reserve Bank of India for this fiscal.

That dashed all hopes of interest rate cuts by the central bank to boost the sagging industrial production.

Traders said steep fall in industrial growth indicated cooling down Asia's fast growing economy and US recession is now percolating across the globe.

Economists and policy makers fear that the spiralling crude oil prices to record $111 a barrel could stoke inflation and investors apprehending hike prices could damage the bottom lines of corporates.


Realty and IT counters

Realty and IT counters bore the brunt of heavy selling.

Foreign Institutional Investors (FIIs) continued their selling spree and they sold shares worth Rs 1,696.90 crore (including Friday's provisional figure) in the week.

According to analysts, the market might suffer a setback on Monday as resurfacing fears of sub-prime mortgage problems.

US stocks plunged on Friday after the Federal Reserve intervened to help Bear Stearns and as many clients pulled cash out of the brokerage amid liquidity fears. The market's "fear gauge" returned to January levels.

Jaiprakash Associates replaced Bajaj Auto in the Sensex from March 14.

Meanwhile, the stock markets, BSE & NSE, will remain closed on coming March 20 and 21 on account of "Id-E-Milad" and "Good Friday" respectively.

The broad-based BSE-100 index declined further by 92.93 points to end the week at 8,355.75 from last weekend's close of 8,448.68.

The BSE-200 index and the Dollex-200 were quoted lower at 1,962.76 and 808.36 at weekend compared to their previous weekend's close of 1,988.14 and 815.78 respectively.

The BSE-500 index also dropped by 94.10 points to end the week at 6,260.84 from last weekend's close of 6,354.94 and the Dollex-30 finished the week down at 3,200.83 from 3,232.50 last weekend.

On the NSE, the S&P CNX Defty softened by 195 points to 4,071.85 from last weekend's close of 4,073.80 and the S&P CNS Nifty Junior eased by 33.35 points to conclude the week at 8,209.75 from 8,243.10 last weekend.

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