Markets end week green, liquidity steps brighten outlook (Lead - Weekly Roundup)

November 1st, 2008 - 5:51 pm ICT by IANS  

SensexMumbai, Nov 1 (IANS) With Indian equities markets worshipping Lakshmi, the goddess of wealth, during Diwali this week, some wealth seems to have come back to the battered markets with a key share index ending the week with a gain of 12.5 percent after losing nearly 35 percent in the first three weeks of Oct.The measures taken Saturday by India’s central bank, the Reserve Bank of India (RBI), will also help to boost liquidity and may brighten investor sentiments when markets reopen next week, analysts said.

Analysts, however, cautioned that while liquidity is much needed, the pace and intensity of the measures being introduced by the RBI may lead to a similar situation as in the US where too much liberalization of the financial markets brought on the present global turbulence.

The benchmark 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the week Friday at 9,788.06, up 1,086.99 points or 12.5 percent from its close Friday previous week at 8,701.07.

Similarly, the broader-based 50-share S&P CNX Nifty of the National Stock Exchange (NSE) finished the week Friday at 2,885.60 points, up 301.6 points or 11.7 percent from its close Friday previous week at 2,584.00.

The BSE midcap ended Friday this week at 3,200.02 points, up 104.34 points or 3.4 percent from its close Friday previous week at 3,095.68 points.

The BSE smallcap ended Friday this week at 3,765.11 points, up 103.28 points or 2.8 percent from its close Friday previous week at 3,661.83 points.

The week, however, began disastrously with the Sensex hitting a three-year low in intra-day trading Monday falling even below the 8,000 mark to 7,985.07 points before recovering somewhat to end the day at 8,509 points, down 191.51 points or 2.2 percent from its close previous Friday at 8,701.07 points.

At the NSE, the broader-based 50-share S&P CNX Nifty closed Monday at 2,524.2 points, down 59.8 points or 2.31 percent from its close Friday previous week at 2,584.00 points.

Tuesday was Diwali and with brokers worshipping Lakshmi at the BSE, cheer returned to the markets and the Sensex made a sharp U-turn to regain the psychologically important 9,000 mark after falling freely for the past few trading sessions.

In special ‘muhurat’ trading Tuesday, marking the beginning of the Hindu Samvat calendar year 2065, the 30-share Sensitive Index (Sensex) of the Bombay Stock exchange closed at 9,008.08 points, up 498.52 points or 5.86 percent.

The Nifty too ended 160.4 points or 6.3 percent higher at 2,684.6 points from its previous close Monday at 2,524.2 points.

Wednesday too saw the Sensex finish a tad higher at 9,044.51 points to post a marginal gain of 36.43 points, or 0.40 percent, over Tuesday’s close.

At the National Stock Exchange (NSE), the broader S&P CNX Nifty ended Wednesday at 2,712.50 points, up 27.90 points or 1.04 per cent from its previous close Tuesday at 2,684.6 points.

There was no trading Thursday as markets were closed on account of Hindu festival Bhai Duj.

After the bear market excesses of the last few weeks, Friday saw Indian equities markets really bounce back with the Sensex closing with a gain of 743.55 points or 8.22 percent - the biggest single-day gain in recent weeks.

Markets opened strong Friday with the Sensex up more than 300 points over its previous close and rallied upward throughout the day to finish at 9,788.06, up 743.55 points or 8.22 percent from its previous close Wednesday at 9,044.51 points.

Analysts said that although the RBI measures may seem justified in view of the extremely tight money market conditions with overnight call money rates shooting up to 21 percent Friday night, these moves should be reversed and a more prudent approach followed as soon as possible.

“I just hope the good work done by the previous RBI Governor Y.V. Reddy to keep financial markets in India on even keel is not reversed in these 15 days of CRR and repo rate cuts by as much as 250 basis points and 150 basis points respectively,” said Jagannadham Thunuguntla, head of the capital markets arm of India’s fourth largest share brokerage firm, the Delhi-based SMC Group.

“While extra liquidity will help big industry directly and small and medium industries indirectly, too much liberalization of financial markets can pose the same kind of dangers that we are seeing in the US,” said Chandra Shekhar Goel, vice president of industry lobby Federation of Indian Small and Medium Enterprises (Fisme).

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