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Mayhem on the Street

Mayhem on the Street

The week (Jan 5 – 9) actually started on an optimistic note. The government came out with fiscal and monetary measures to put the economy back on high growth path. On Friday (Jan 2), foreign and domestic funds were net buyers. U.S. stocks ended higher on Friday with the Dow Jones closing above 9,000 on expectations of another stimulus packaged once the Obama-led regime takes over the government. With positive global cues, the Sensex finally closed above 10,000 and the Nifty above 3,000.
Tuesday started on a subdued note. Despite the market turning volatile in the mid-afternoon trades, it bounced back. The Sensex closed slightly higher while the Nifty ended flat.

Wednesday and Friday were catastrophic days for the market thanks to the Satyam scam.

On Wednesday it was complete mayhem on Dalal Street. The market started off on a good note, but once news of the Satyam chairman’s letter was out, there was all round selling in scrips across sectors. The Sensex closed below 10,000 and the Nifty below 3,000. Even the mid- and small-cap indices were not spared. Shares of Satyam tumbled by over 77%

The market was closed on Thursday, a holiday. On Friday, the Sensex crashed to a low of 9250.82 and recovered slightly to end the day at 9406.47. The Nifty touched a low of 2810.25 before closing at 2873.

As quarterly results begin to pour in, the market may or may not get severely hit since a lot of the pessimism is already discounted for. But the timing for this event could not have been worse and this week will solely be remembered for the Satyam debacle. News reports state that SEBI has said that the Sensex and Nifty companies will be reviewed by another auditor after they are audited by their respective statutory auditors.