Markets end in red despite mid-week rally (Weekly Market Review)

October 4th, 2008 - 2:50 pm ICT by IANS  

SensexMumbai, Oct 4 (IANS) Amid weak global cues and the news of signing of the $700 billion bailout plan coming only late on Friday night, Indian equities market ended the week with big losses despite a bit of a rally mid-week.The overall trend was that no one was willing to take strong positions either way - bull or bear - as there was little liquidity and depth in the market and there was far too much nervousness and uncertainty all round, analysts said.

The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the week Friday dipping below the 13,000 mark at 12,526.32, shedding 575.86 points or 4.4 percent during the week from its previous close last Friday at 13,102.18.

The broader based 50-share S&P Nifty index of the National Stock Exchange also ended the week Friday shedding 82.75 points or 2.1 percent in the week to 3,902.50, down from its previous close last week at 3,985.25.

The all round nervousness was reflected in the fact that both BSE mid-cap and small-cap indices lost much more heavily than the Sensex component stocks, showing there was little general buying interest, analysts said.

The BSE mid cap index shed 263.02 points or 5.3 percent in the week to close Friday at 4,677.80 against its last week’s close at 4,940.82.

The BSE small cap index too lost 396.38 points or 6.8 percent during the week to finish Friday at 5,465.40 against its last week’s finish at 5,861.78.

The week opened Monday with the BSE Sensex breaching the 13,000 mark Monday and closing at 12,595.75, down 506.43 points or 3.87 percent from its previous close last Friday at 13,102.18.

The S&P Nifty finished at 3,850.05, down 135.2 points or 3.39 percent from its previous close last Friday at 3,985.25.

Markets opened very weak Tuesday but after C.B. Bhave, chairman of the Indian market regulator Securities and Exchange Board of India (SEBI), assured investors in a hurriedly called press conference in New Delhi, markets recovered later in the day and finished in the green.

The BSE Sensex plunged by 442.20 points soon after opening to a near two-year low of 12,153.33 - a loss of 3.5 percent - amid heavy selling in stocks of banking, metal, realty and IT sectors.

By close of trading, however, the Sensex recovered sufficiently to end at 12,860.43, up 264.68 points or 2.10 percent from its previous close Monday at 12,595.75.

The S&P CNX Nifty also showed a similar trend and closed at 3,938.75, up 88.7 points or 2.30 percent from its previous close Monday at 3,850.05 after an initial slide.

With the US House of Representatives rejecting the $700 billion bailout plan Monday, markets all over the world crashed and the Dow Jones Industrial Average on the New York Stock Exchange dropped Monday by 777.68 points or 7 percent.

Markets in Europe too crashed Monday while those in Asia did the same Tuesday. Only the Indian market bucked the trend and behaved in a surprising manner Tuesday, ending in the green, analysts said.

With news that the US Senate had decided to meet Wednesday to vote on a revised bailout plan after it was rejected by the House of Representatives Monday, all global markets bounced back Tuesday and Wednesday.

The Indian equities markets, however, slid into the red in the morning session Wednesday on liquidity fears, analysts said, but bounced back on strong global cues after a sun outage break had stopped online trading for some time.

The BSE Sensex closed Wednesday at 13,055.67, up 195.24 points or 1.52 percent against its previous close Tuesday at 12,860.43.

The S&P CNX Nifty also showed a similar trend and finished at 3,950.75, up 29.55 points or 0.75 percent from its previous close at 3,921.20 after being in the red throughout the morning.

The gains made on Tuesday and Wednesday had almost erased the losses Monday but the mid-week rally had little steam.

Markets were closed Thursday on account of Eid-ul-Fitr and the birth anniversary of Mahatma Gandhi.

On reopening Friday, markets went into a tailspin again and the BSE Sensex closed at 12,526.32, down 529.35 points or 4.05 percent from its previous close Wednesday at 13,055.67.

The S&P CNX Nifty finished at 3,902.50, down 48.25 points or 1.22 percent from its previous close Wednesday at 3,950.75.

Now that the $700 billion bailout plan has at last been put in place, the outlook for the next week is mixed, analysts said, but warned there was still far too much nervousness and uncertainty.

US unemployment data clearly showed the US had gone into a recession and this would certainly affect the prospects of Indian companies, analysts said. The global financial crisis too was still playing itself out and things were certainly far from hunky dory, they said.

The liquidity crunch in the Indian markets also needs to be eased through decisive action by the banking regulator the Reserve Bank of India, they said.

On balance, there were not enough positive pointers on the table to expect the market to rally strongly in the coming week although it is likely to get support at the current level, the analysts added.

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