The Hindu Business Line : Markets remained stressed

Last week began on a grim note with Belgium’s largest service firm Fortis Financial and UK’s Bradford and Bingley Plc filing for bail out. The US senate’s refusal of the bailout package for the bankrupt firms added further fuel to the brewing turmoil in the financial markets, leading the Dow Jones to shed over 777 points on Monday (6.9 per cent).

The scenario back home was also no different. The Sensex closed below the psychological-13K level with the bank stocks taking the worst blows.

The losses would have been higher had it not been for the assuring remarks on the health of our markets made by the Finance Minister, Mr P. Chidambaram and the SEBI Chief, Mr C.B. Bhave. Even the mid-week approval of the rescue-plan by the US senate failed to assuage sentiments as markets continued to remain choppy.

Commodities

Oil prices sank to below $94 on Thursday on worries of slowing demand in the US economy.

Dollar’s gain against the Euro furthered the fall in oil price as commodity investors discarded oil and stuck to dollar.

Gold remained volatile through the week, falling and bouncing back with oil and dollar. It traded at $835.50 per ounce on Friday, up 8 per cent from the previous week’s close.

Movers and Shakers

Corporate India couldn’t provide much of a positive trigger that the markets needed during the week.

Rumours on a private bank’s bankruptcy saw its stock battered badly. The sentiment turned negative on most banking stocks, as reflected by the bankex that remained in red throughout last week.

Even the Indo-US nuclear deal’s approval by the US Senate on Thursday did not see the indices (Sensex and Nifty) gaining on the following day.

Power stocks remained stoic to the news, and the index lost 1 per cent (BSE Power) on Friday’s trading.

Falling crude prices, however cheered the oil marketing companies, with IOC gaining 3.6 per cent, BPCL gaining 10 per cent and HPCL gaining 5.1 per cent over the week.

Reliance Industries, following rumours of its promoters selling stake moved in the red, losing over 10.8 per cent.

Metal stocks were also dumped by investors following the fall in commodity prices — Jindal Steel (fell 12.3 per cent), Sterlite (12.8 per cent) and Tata Steel (15 per cent).

The news of HCL making counter-offer for Axon saw the stock of Infosys Technologies fall by 3.6 per cent during the week.

The Union Government’s approval of the Ranbaxy-Daiichi deal on Friday saw Ranbaxy’s stock spurting and moving above its previous week’s lows. The stock gained 5 per cent on Friday.

The key indices — Sensex and Nifty closed the week losing 4.4 per cent and 4.2 per cent respectively. The BSE Sensex touched a low of 12153.55 points.

The ambiguity about US economy’s recession and investor’s loss of faith on the global financial system weighed on the markets.

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