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Markets this week
Equity and currency markets rose on Monday, buoyed by the massive liquidity support announced by RBI earlier on Saturday. The Sensex regained the 10,000-mark, in what the market-men termed as a relief rally. The index closed up 550 points or 5.62 per cent to close at 10337.68. The broader Nifty gained 5.48 per cent to end at 3043.85.
October has really been a bad month for Indian mutual funds with their assets under
management witnessing the sharpest fall in recent times. All the 30 fund houses which reported their monthly AUM have posted a drop in their asset base.
FIIs have been net buyers in the last two trading sessions after two weeks of continuous selling. Marketmen described this as a temporary phenomenon as the FIIs are covering their short positions, since SEBI has disapproved of short-sales and has directed them not to take any more fresh positions in overseas markets.
Commodity stocks, beaten down to rock-bottom valuations in the recent rout, dominated the gainers list, as hope gained ground that prices of key commodities such as aluminium, steel and oil may have already been factored in as preparatory for a worst case scenario for the global economy.
Public sector banks are cutting their lending rates. Following a meeting with the Finance Minister, Mr P. Chidambaram in New Delhi, bank chairmen on Tuesday said that they would slash their prime lending rates by about 0.75 percentage points.
The first sign of slowdown in cement demand was evident from the fall in production
and dispatches for October announced by major cement companies. Ambuja Cements registered a four per cent decline in production, and ACC reported a 1.13 per cent drop. Cement scrips remained almost flat even as the Sensex rose by 293 points.
Failing to participate in the relief rally of the equity market were IT shares, which appeared to track the US elections more than the market trend itself. The BSE IT index was the worst performing sectoral index as it ended the day down 4.33 per cent from its previous close.
Mr Barack Obama swept to a historic and decisive victory, heralding the emergence of United States' first black President; he pleaded for time to transform the superpower as he faced up on Wednesday to the huge task of forging his promised change.
Notwithstanding apprehensions over a likely adoption of an anti-outsourcing stance by the President-elect in the run-up to the polls, the Indian IT industry has welcomed his victory and also exuded confidence that feathers would not be ruffled in keeping American companies competitive.
Heavy profit booking coupled with some negative news led to a sharp fall in the stock of index heavyweight Reliance Industries, which contributed to the 4.8 per cent fall of the Sensex on Wednesday. The stock fell by 12.9 per cent to close at Rs 1269.
Tata Steel witnessed a sharp fall of over 10 per cent as Arcelor Mittal's guidance for the current quarter painted a bleaker picture than expected. Market participants took a dimmer view of Corus earnings for this quarter.
The recent relief rally was a windfall for fund houses such as HSBC Emerging Markets Fund, DBS Chola Opportunities Fund, LIC Growth Fund and JM Contra Fund (up 25-27 per cent), all of which have seen a substantial improvement in their NAV in this particular rally, which still rules below par.
On Thursday IVRCL after it announced strong results last week, achieved a gain of 7 per cent to close at Rs 132. The stock has moved up in the past four trading sessions from a recent low of Rs 79.40.
Mr Obama's historic win, the recessionary trends and its negative impact on the economy dawned on investors, resulting in the strong pull-back rally abruptly coming to an end. On a week basis, the Sensex gained a slender 190 points, and on Friday the markets witnessed the usual volatility and finished with a gain of 230 points at 9970.
Compiled by B.L. Sudarsan
Podcast by M.J. Madhavan, S. Narayanamurthy
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