Equity markets shrug off rate hikes (Weekly Market Review)

August 2nd, 2008 - 3:20 pm ICT by IANS  

A file-photo of Sensex

Mumbai, Aug 2 (IANS) The Indian equity markets continued their gaining rally this week, shrugging off rate hikes by the apex bank. Strong global markets and fall in crude oil prices acted as positive triggers for the markets. The rally defied an inflation rate of 11.98 percent and the decision by the Reserve Bank of India (RBI) on July 29 to tighten liquidity in the system by raising the Cash Reserve Ratio (CRR) of banks by 25 basis points to 9 percent and the short-term indicative rate - the repo rate - by 50 basis points to 9 percent.

According to the market regulator Securities Exchange Board of India, Indian equity markets attracted an investment of $148 million during the week.

Dipon Mehta, Director with Mumbai-based brokerage firm Dipon Shares and stock brokers, said: “Market next week will be basically range bound and of course market sentiment will be driven by fluctuations in crude oil prices and US markets.

“Negative news flows into the market are getting discounted and if the correction in the oil prices continues it will be a big boost.”

Echoing the same sentiment, Ashok Jainani, research head, of Khandwal Securities Limited, said: “Clarity in the market is still not emerging because of the major macro economic factors which remains challenging.

“Markets are likely to be edgy as corporates results are showing the growth moderating and margin contraction,” Jainani told IANS.

The 30-share benchmark index of the Bombay Stock Exchange (BSE), the Sensex, rose 381.75 points or 2.67 percent to 14,656.69 in the week ended Aug 1.

The S&P Nifty rose 101.7 points or 2.35 percent to 4,413.55.

The BSE Mid-Cap index rose 70.15 points or 1.26 percent to 5,642.74 and the BSE Small-Cap index rose 201.32 points or 2.96 percent to 6,980.10.

On Monday on the eve of RBI’s monetary policy review the market ended on a cautious note. The Sensex gained 74.17 points or 0.52 percent higher at 14,349.11. The broader based Nifty rose 20.25 points or 0.47 percent at 4,332.10.

On Tuesday, the benchmark indices slumped sharply after the RBI raised rates at its quarterly monetary policy review.

The Sensex lost 557.57 points or 3.89 percent at 13,791.54. The Nifty was down 142.25 points or 3.28 percent at 4,189.85.

On Wednesday, the Sensex jumped 495.67 points or 3.59 percent at 14,287.21. The Nifty jumped 123.70 points or 2.95 percent at 4,313.55.

On Thursday, the Sensex rose 68.54 points or 0.48 percent at 14,355.75. The Nifty was up 19.40 points or 0.45 percent to 4,332.95.

On Friday, The Sensex surged 300.94 points or 2.10 percent at 14,656.69. The Nifty rose 80.6 points or 1.86 percent at 4,413.55.

India’s second largest private telecom service provider Reliance Communications tanked 13.18 percent to Rs.436.80 in the week.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries rose 7.10 percent to Rs.2299.75 in the week.

India’s largest private sector bank by market capitalization ICICI Bank fell 2.25 percent to Rs.642.10.

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