The Hindu Business Line : Markets this week

Bears, in a punishing mood, further tightened their hold and hammered the markets with renewed ferocity. Sensex and Nifty were perched precariously, often breaching new yearly lows. After a brief positive start on Monday, the bears returned with renewed vigour to bombard the markets. The Sensex nose-dived to lose nearly 340 points from the previous close of 13800 and finished the day at 13460.

Anil Dhirubhai Ambani Group stocks hit their 52-week lows, as investors pared their exposures in these stocks fearing the deepening of sibling rivalry over the MTN deal.

Slump in demand for cement stocks owing to a rise in interest rates and an aggressive monsoon across the country took these to their new 52-week lows. The sector is witnessing renewed selling though most of the stocks hit their lowest prices.

The Nifty's plunge to 3881 levels on Monday rendered the 2000 market correction more vicious than at any other time for the Indian markets in the last 6 years. The correction that began in early January 2008 has so far shaved 40 per cent off the Nifty's peak value of 6287 points. In contrast, every previous corrective phase, from 2004, has braked at a 30 per cent decline or even less.

A pall of gloom descended on Dalal Street on Tuesday as the BSE benchmark index Sensex slipped below the psychological 13,000-mark - the level last seen more than a year ago - with stocks coming under heavy selling pressure. A host of negatives such as weak European markets, high oil price, rise in interest rates and fears of inflation dampened investor sentiment throughout the day.

The markets have de-rated the realty sector on concerns of declining property prices, rise in borrowing costs for realty companies and home buyers and increase in construction costs. The realty index has lost more than 50 per cent over the six months.

The Sensex bounced back on Wednesday snapping the losing streak, with a hefty gain of 700 points mainly on buying support from domestic institutions and proprietary traders. Somewhat positive news on the political front, good rains, strong opening of the European markets and short covering brought buyers back to the severely battered market, said analysts.

The sharp erosion in DLF stock price made the management to consider buy-back of its equity shares. The announcement lifted the sentiment on Wednesday and the stock gained a whopping 15 per cent at Rs 423.95 against the previous closing price of Rs 368.40.

The airline stocks tumbled on the bourses to post their new 52-week lows, on concerns of further rise in ATF prices despite the markets jumping more than 700 points. SpiceJet touched an intra-day low of Rs 20.5, Deccan Aviation hit a low of Rs 54 and Jet Airways virtually hit an airpocket at an all-time low of Rs 308.

Stock markets suffered another major fall on Thursday, wiping out most of previous day's gains. Crude touching $146 a barrel coupled with poor job data in US dampened sentiment in all major markets. The BSE benchmark index lost 570 points and closed at 13,094 after a 700 points dip intra-day. The see-saw movement of Sensex for the past two days puzzled the investors, who were not able to fathom the trend.

Severe market uncertainties of 2008 has literally pulped newly listed stocks. Twenty five out of 31 new companies listed on the bourses in 2008 are trading below their issue prices. Future Capital, Porwal auto, BGR Energy, Precision Pipes are some of the stocks that lost more than 50 per cent from its issue price.

After heavy bear-hammering in the recent market fall, short covering by investors helped the share prices of select public sector banks to stage a recovery. Bank of Baroda was up 2.75 per cent from its previous close at Rs 210.85, Bank of India gained 0.6 per cent at Rs 224.9, Corporation Bank moved up 0.75 per cent to Rs 263.1, Union Bank jumped 6.19 per cent to Rs 112.45 and SBI was up 2.07 per cent at Rs 1,101.55.

The Sensex stood its ground on Friday with a gain of 360 points despite inflation rising to 11.63 per cent from 11.42 per cent earlier, oil price surging to record $146, political one-upmanship of different hues, and a host of other negatives. Though this week saw bouts of sharp dips in the markets, Sensex made a smart recovery and finished the week losing just 340 points on possible political stability with Samajwadi Party approving the N-deal and ample rains.

Compiled by B.L. Sudarsan
Podcast by S.Vasudevan