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Market Eye
| Weekly Wrap: Sensex loses over 550 pts, ends below 10,000 | 18/10/2008 11:14:08 | It was a splendid start for the Sensex last week (October 13 - 17) following the Union Finance Minister, P. Chidambaram's reassuring words about the strength of the Indian economy.
His assurance that the Government and the central bank would pump in liquidity into the system was enough for the market to stage a spectacular rally on Monday. The Sensex shot up by 781 points and the Nifty ended stronger by around 211 points.
The market gave up a good portion of its gains in late afternoon trade on Tuesday after the Election Commission announced dates for assembly elections in five States. The Sensex, which was sailing along merrily till then, fell off higher levels and trimmed its gain to around 1.5% or 174 points. The Nifty recorded a modest gain of 28 points that day.
Concerns over a global recession took front seat thereafter and the positive moves by the central bank to help mutual funds, which are facing redemption pressure, were ignored by the market. And the Sensex went sliding down from Wednesday.
After suffering a loss of nearly 675 points on Wednesday, the barometer lost 228 points on Thursday and then, a whopping 606 points on the final session during which it recorded its lowest mark since June 20, 2006. The Nifty lost 180, 69 and 195 points respectively on those three days.
The Reserve Bank of India announced a surprise 100-basis point cut in Cash Reserve Ratio during the week. Central banks and governments across the globe were seen working overtime to pull the drowning financial markets back to life. Though the moves did result in a couple of strong rallies in global markets, fears of a further slowdown and an imminent recession prevented investors from picking up stocks even at sharply lower levels. Instead, the participants were seen pressing sales at sharp rallies.
The market regulator SEBI has decided to look into the short positions created by FIIs through Participatory Notes. The regulator also decided to raise margins in the derivatives segment.
The Sensex, which crashed to a low of 9911.32 in late afternoon trade on Friday, ended the week with a loss of 552.50 points or 5.25% at 9975.35. The Nifty closed 205.60 points or 6.26% down at 3074.35. The Sensex, it may be recalled, had hit a historic high of 21,206.77 in intra-day trades on 10 January this year. When it touched a low of 9911.32 on Friday, it had crashed by a massive 53% or around 11,230 points from that historic level.
It was not a bad start at all for the market on Friday as the sharp rebound on Wall Street and a fairly steady trend on the Asian bourses triggered some early buying in early trade. IT stocks led the way in opening trade and capital goods, realty, power and oil stocks too had their moments in the positive territory.
However, after moving in choppy fashion till an hour past noon, the Sensex began its slide as sectors one after the other started to crumble under pressure. Selling pressure gathered such a force that the fall was quite rapid in late afternoon trade and the Sensex plunged below the psychological 10,000 mark.
The sharp fall of US index futures contributed to the massive fall. Inflation based on the whole price index rose 11.44% in year through October 4, 2008, lower than previous week’s 11.8% rise, but the marginal decline failed to enthuse investors.
Among the sectoral indices, the Bankex finished with a sharp gain thanks to some strong buying at select counters. BSE Realty ended with a slender gain despite a host of stocks from the sector going down sharply on sustained selling pressure.
BSE Auto (down 4.79%), Consumer Durables (down 2.53%), Capital Goods (down 9.29%), FMCG (down 0.08%), Metal (down 11.32%), Oil & Gas (down 10.9%), Power (down 7.7%), PSU (down 5.43%) and Realty (plus 0.07), tumbled to their 52-week lows last week.
Bankex (+4.27), Healthcare (-0.13%), IT (-1.82) and Teck (-2.08) indices had hit their 52-week lows in the previous week. BSE Midcap (down 3.57%) and SmallCap (down 4.31%) indices recorded their new 52-week lows on Thursday, the 16th October.
Among Sensex components, Hindustan Unilever 8.6%), ICICI Bank (7.6%), Satyam Computer Services (6.4%), State Bank of India (4.6%), DLF (3.4%) and HDFC (3.3%) closed with gains.
Hindalco went down by over 20%. Tata Motors lost 16.5%. ONGC eased by 15.3%. Reliance Industries tumbled by 14.5%. Tata Steel, Tata Consultancy Services, Grasim Industries, Ranbaxy Laboratories, Jaiprakash Associates, BHEL and Larsen & Toubro ended lower by 10% - 14%.
ACC and NTPC lost 9.7% and 9.5% respectively. Maruti Suzuki, Mahindra & Mahindra, Reliance Infrastructure, Tata Power, ITC, Wipro, HDFC Bank, Bharti Airtel and Infosys Technologies lost 2% - 6%. Reliance Communications and Sterlite Industries ended with marginal losses.
Nalco, Power Grid Corporation, Reliance Petroleum, Ambuja Cements, Siemens, Zee Entertainment, Suzlon Energy, HCL Technologies and SAIL were among the prominent losers in the Nifty index.
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