The Hindu Business Line : Sensex continues its winning streak

The Sensex ended the week at 9964.3 points, marginally higher (1.8 per cent) than the previous week’s close. This rally in the market followed a strong 1000-points plus rally in the previous week. The decision of the Reserve Bank of India to cut the repo rate, cash reserve ratio (CRR) and statutory liquidity ratio (SLR) to infuse greater liquidity into the financial system lifted sentiments with the Sensex bettering the 10,000 mark intra-week.

The week saw Mr Barack Obama becoming the next President of USA. Though there were fears that he may play a protectionist role domestically, this did not seem to have any role in the overall market moves. The IT index, however, fell 6.7 per cent during the week on speculation that there could be a negative impact on outsourcing business after Mr.Obama’s win.

The inflation number inched marginally upwards at 10.72 per cent for the week ended 25 October 2008.

The Government’s announcement that public sector banks were ready to provide more credit for businesses lifted the bourses in the early part of the week.

The Bank of England cut its key lending rate by a record 150 basis points to 3 per cent and the European Central Bank by 50 basis points to 3.25 per cent which calmed global sentiments on liquidity.

Index watch

Among the sectoral indices, the BSE Realty and the BSE Power indices gained 18.43 per cent and 12.26 per cent respectively. IT and metal stocks were the biggest losers during this week. There were apprehensions of falling demand from end-users, attributable to a slowdown in global growth, that caused the metal stocks to move southwards. Moreover, the margins in the coming quarters could get hurt on the back of softening prices. Shares of the auto sector were subdued owing to a demand slump faced by these companies. The BSE Bankex gained 10.4 per cent, boosted by RBI’s measures to infuse liquidity in the system. Many public sector banks cut their prime lending rates (PLRs) during the week.

Stock-specific action

Ranbaxy Laboratories and DLF were among the top gainers of the week. Daiichi Sankyo completed the takeover of Ranbaxy Labs, and now holds a 63.92 per cent stake. DLF gained 27 per cent, in anticipation of lower home-loan interest rates . Sterlite Industries was the top loser of the week, losing 12.8 per cent. Reliance Industries led the gains during the early part of the week, but fell by 11.1 per cent during the week, making it the second biggest loser of the week. Amid concerns that the recent fall in crude oil prices, and a slowing demand environment could hurt sales and refining margins weighed on the stock. JSW Steel fell 6.4 per cent as it reportedly plans to cut steel production by 20 per cent.

The rupee, which touched a record low of 50.29 to the dollar the previous week, gained ground during this week to close at Rs 47.65 due in part to rupee liquidity increase

More Stories on : Stock Markets | Commentary

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page