Despite the bulls calling the shots this week, it is too soon to pre-empt a rally. Slower economic growth, uncertain corporate profits, tight liquidity and a lack of economic overhauls ahead of a general election will give the bears plenty of ammunition to fight back.
Monday and Tuesday saw the bulls start the week with a vengeance. Banking stocks, which were thrashed earlier, rose. ONGC rose after global crude oil prices fell. The company shares losses with state-run oil refiners who sell petrol and diesel below cost to help the government control inflation. On Tuesday, Jaiprakash Associates rose after selling a stake in a unit to ICICI Bank. Reliance Energy finally began its buyback. Infotech stocks too gained.
On Wednesday the market fell. Hindustan Unilever and ICICI Bank slipped. Tata Steel rose after BNP Paribas India Solutions said that recent declines among steel stocks had created buying opportunities. Tata Motors slipped slightly on the announcement that the company was buying Ford Motor Co's Jaguar and Land Rover luxury brands. The purchase was announced after the market closed. On Thursday, Tata Motors slipped again on speculation that its $2.3 billion purchase would cut profits and boost funding costs.
The Sensex closed flat on Thursday, but in negative territory. The Nifty too closed flat, but in positive territory.
Friday was a surprise. Inflation was high at 6.68% (for the week ended March 15, 2008), and so was the market. The breadth of the market was positive in favour of advances. Even the mid- and small-cap indices closed higher. All the BSE sector indices closed in the green.