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Boom & Doom

This week the FIIs continued to buy and mutual funds sold. But volatility has set in once again. The Sensex may continue its upward climb but not without a fight from the bears

On Monday the markets cheered as the Sensex rose for the 10th consecutive trading day, its longest winning streak in more than two years. But despite the climbing Sensex, banking stocks fell. Data released by the central bank on September 28 showed that India's money supply growth quickened in the two weeks ended September 14. The M3 measure of all money in circulation and held in savings and investments increased 20.4% in the two weeks through September 14 from a year earlier. An increase in money supply may fuel inflation which will deter interest rates from falling.

Tuesday being a holiday, the Sensex continued to rally on Wednesday. RIL, Tata Power, Reliance Energy and NTPC all gained. DLF and Suzlon Energy too surged. The latter stated that it got an order from DLF to set up a wind farm. Zenotech Labs rose after Ranbaxy announced that it is buying a majority stake in the company.

The Finance Minister, Chidambaram cautioned retail investors against entering the market as the benchmark neared 18,000 points. Besides warning retail investors to tread cautiously, it appears that he even managed to rouse the bears from their slumber. On Thursday, the run came to a halt. The Nifty closed flat but in negative territory while the Sensex declined. HDFC and ICICI Bank fell. Mid caps did not do too badly. The BSE Mid Cap closed higher but the CNX Midcap ended flat in negative territory.

On Friday, the bears continued to rule. This time, the Sensex closed flat in negative territory while the Nifty declined. Both mid-cap indices declined. Amongst the sectoral indices, BSE Auto, BSE Bankex, BE Consumer Durables, BSE FMCG, BSE IT, BSE Metal, BSE PSU and BSE Realty also fell. BSE Healthcare closed flat and BSE Teck rose.

The sectoral indices that rose the entire week were BSE Capital Goods and BSE Oil & Gas.

When looking at the Sensex stocks' gains over the week, the Reliance family has done pretty well. Reliance Energy Ltd (20.05%), Reliance Communications Ltd (10.09%) and Reliance Industries Ltd (8.17%) all showed tremendous gain. The board of REL approved a plan to sell shares of its unit Reliance Power Ltd.

NTPC was another significant (10.86%) gainer. Finance stocks lost: SBI (-4.48%), HDFC (-2.86%), HDFC Bank (-2.68%), ICICI Bank (-2.48%). In tech stocks, Infosys led the pack with a 4.90% gain followed by TCS (1.27%), Wipro (0.28%) and Satyam (0.21%). ITC was the biggest loser at -5.77%.

Vital Stats: October 1- 5, 2007
   Sensex   Nifty   BSE Mid Cap   CNX Midcap
Mon 17328.62 5068.95 7528.64 6962.00
Wed 17847.04 5210.80 7542.00 6980.10
Thu 17777.14 5208.65 7576.27 6977.05
Fri 17773.36 5185.85 7485.51 6909.35
Net Buying (Equity)
   FII   MF     
Mon 2196.00 -127.80  
Wed 3161.50 -102.10  
Thu 575.00 -532.50  
Figures in Rs/crore
   BSE Turnover   BSE Shares   NSE Turnover   NSE Shares
Mon 7228.53 5297.00 17357.41 7936.87
Wed 10055.03 6439.00 24842.41 9874.20
Thu 7892.00 4775.00 18592.65 7627.91
Fri 7778.58 5537.00 20231.21 11307.00
Number of shares in lakh. Turnover in Rs/crore.