The Hindu Business Line : Bear party continues on Dalal Street

The week began with the market gaining momentum, following the massive bailout announced by the European Union, nationalisation of some British banks, and the consequent global market recovery.

The US and European Governments have agreed to buy shares in numerous banks and financial institutions in a bid to recapitalise them. The momentum was, however, short-lived.

The markets were not enthused by the measures announced by the Government and the RBI.

The CRR was cut by another 100 basis points, expected to release Rs 40,000 crore into the system.

Along with this, the farm relief package would release around Rs 25,000 crore.

The markets did not also take cognisance of the strong Q2 results posted by Axis Bank, L&T, HDFC Bank, among others and also of the fact that oil prices dipped below $75 a barrel.

Instead, the Sensex pared early gains on announcement of state elections.

Sector performance

The BSE Metal index fell by 11.3 per cent; the highest for the week among sector indices, after Posco came out with its steel outlook.

Posco expressed concerns of higher input costs, adverse currency effects and weaker prices of steel for the next quarter.

The BSE Bankex was the only significant sector gainer while the already beaten down realty remained flat. Banking stocks got a lift on account of the CRR cut.

Oil and gas, capital goods and power stocks dipped sharply by 10.9 per cent, 9.3 per cent and 7.7 per cent respectively over the week.

The decline was quite pervasivewith other indices such as PSU, auto and consumer durables also registering steep declines.

Stock-specific action

Kingfisher Airlines and Jet Airways formed a strategic alliance that inter-alia, includes code-sharing and joint fuel management.

While the former gained marginally during the week, the news did not have any positive impact on the Jet Airways stock as it declined by 7 per cent during the week.

A cash-strapped hedge fund with exposure to a handful of index heavyweights is reported to have sold the stock of Reliance Industries, which sent the stock reeling to an eighteen-month low of Rs 1,327 intra-day on Thursday. This weighed heavily on the Sensex.

Moreover, many blue-chip companies registered all-time lows on the back of heavy FII selling.

FIIs were net sellers to the tune of Rs 9,869 crore in October. As the apprehensions of a global recession loomed large, the markets in Asia and Europe continued their decline.

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