The Hindu Business Line : Markets this week

Continuing its losing streak from where it left off, on Monday too the Sensex fell by 150 points from the previous close of 14,570. The record double digit inflation body blow, the somewhat unproductive Jeddah meet on oil, the continuing UPA-Left stand-off on civil-Nuclear deal, and the relentless FII selling forced the panic-stricken investors to exit in a hurry. The sensex plummeted to touch the intraday low of 14,160 and closed the day at 14290 with a loss of nearly 260 points.

As many as six key sectoral indices hit their 52-week lows as the Sensex plunged by another 2 per cent. The BSE PSU Index , Bankex, Realty, Auto, Power and Capital Goods - all recorded their new 52-week lows on Monday. From its peak in January 2008, the Sensex has tanked 32.6 per cent.

To contain soaring inflation, RBI on Tuesday hiked both repo rates and CRR by 50 basis points each. While the repo rate has been hiked with immediate effect to 8.50 per cent, the CRR will be hiked in two tranches, to 8.5 per cent on July 5, and 8.75 on July 19. The markets ended positive, with the RBI measures already factored in.

The 30 per cent market correction this year has witnessed bouts of volatility severely impacting investor sentiment. This is reflected in the India VIX (volatility index) spiking above 50, twice in the last three trading sessions. Though the closing level of the India VIX is well below the peak of 54 points, recorded in January, the index touched its intra-day highs at 57.8 and 67.5 on June 20 and 24 respectively.

Even as the Sensex breached 14,000 intra-day level, on Tuesday, mutual funds with cash in their kitty, appeared to be waiting for the market to fall further to pick up stocks at lower levels. Analysts say lack of positive signals and fears of possible redemption pressure in the near future seem to have delayed their investment decisions.

Yet another UPA-Left meeting on the N-deal ended Wednesday with a customary `no result' and postponement of decision. What with the hardening stance between the PM and the Left on this issue, markets heaved a sigh of relief as hard decisions have been deferred.

Shares of Infosys Technologies Ltd fell 2.48 per cent on Wednesday on talks that HSBC might acquire UBS, one of Infosys' top-10 clients. Shares of the tech major dropped by Rs 44.40 to Rs 1,748.60 from Rs 1,793 on fears that UBS might favour its own vendor.

In a major consolidation in the telecom sector, Idea Cellular announced acquisition of 40.8 per cent stake in Spice communications, for about Rs 2,176 crore at a price of Rs 77.30 per share. The share price of Spice, hovering around Rs 55, was on fire and finished at Rs 72.

Short covering in oil and gas stocks led the blue-chip ones to gain on the bourses on Thursday. The BSE-Oil & Gas index was the top gainer, up 2.82 per cent.

Idea Cellular stock ended weak, a day after the company acquired controlling stake in Spice Communications, and came under some pressure on concerns over its short term margins owing to the lower profitability of Spice.

Nothing seems to be going right for the markets these days, with blood-baths every now and then. On Friday, it was the sixth straight weekly loss reflecting the severe concern among investors. Screens are awash with red as all the sectors post huge losses. ICICI Bank and DLF Ltd were among the top losers. Sensex ended the week with a hefty loss of nearly 770 points to finish at 13,800.

Compiled by B.L. Sudarsan

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