The Hindu Business Line : Hope wilts on bailout uncertainty

The bellwether index could not however derive much comfort from the global credit uncertainties and witnessed a decline of 6.7 per cent over the week.

Stock-specific action

The week kick-started with Reliance Industries announcing the operation of its KG Basin by early next year. Though the news provided marginal support to the stock price, the same could not be sustained.

The stock declined around 6 per cent over the week to Rs 1,960. Ranbaxy Laboratories nose-dived 11 per cent to hit an 18-month low on Tuesday, as drug authorities in Canada and Germany followed the US in bringing the company under their caution-scanner.

On Wednesday, Vedanta announced its decision to drop its restructuring plan. This resulted in the stock of Sterlite Industries surging by 6 per cent on the day of announcement.

The stock had earlier reacted negatively to the restructuring plan as Sterlite would have been stripped off its aluminium business.

More gloom

The market closed in the green on Wednesday after Goldman Sachs said it would raise capital and Japanese banks bought stakes in other US lenders, easing concerns over a deepening of the global credit crisis.

The joy was, however, short-lived as markets took to their pessimistic ways once again on Friday as Washington Mutual Inc became the biggest bank failure in American history.

JPMorgan Chase & Co, agreed to pay $1.9 billion for the deposits of Washington Mutual after the US Government closed the Seattle-based lender.

Clearly, the negative global cues led to a savage correction in the markets; the S&P CNX Nifty on Friday closed below the psychologically-comforting level of 4000.

Sector moves

Among sectors that took a blow were realty, IT, and capital goods. Major losers at the BSE and NSE include Ranbaxy, Wipro, DLF, TCS, ICICI Bank, Infosys and HDFC. Tata Motors, Hindalco, Satyam Computer Systems and Grasim lost heavily; Unitech, Siemens and Suzlon were other conspicuous losers. FIIs continued their selling spree in the Indian markets. While US-based FIIs off-loaded Indian equities, a large proportion of such stocks shifted to non-US based FIIs such as Deutsche Securities and Swiss Finance Corporation. According to BSE data, while FIIs had bought equities valued at Rs 48,110 crore, they sold equities worth Rs 57,961.61 crore.

There appeared to be very little comforting news from other macro fronts that could be carried forward as cues for the coming week. While the rupee declined for a seventh week to Rs 46.54, inflation remained unchanged at 12.14 per cent.

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