Despite the 9% FY08 GDP growth and expectations for 8-8.5% GDP growth for the current fiscal year, the week started off on a bad note. Inflation is bad news. And, if it does spiral out of control, the RBI will have no choice but to resort to some tightening measures and may even hike the repo rate. Right now, we have to deal with fuel price hike.
Turmoil on the political front is never good for the equity market and the sentiment was poor after the RSP-members of the Left Front decided to pull out from the UPA-Left coordination committee.
On Monday, UK-lender Bradford & Bingley revised its rights issue at a 33% discount with a warning that conditions could get worse while US stocks slipped after S&P slashed its ratings and outlook on top Wall Street firms.
Management shakeup at Wachovia and Washington Mutual also stoked renewed worries about the health of the global financial sector. US light crude oil for July delivery settled at $127.76 a barrel on the New York Mercantile Exchange.
So despite a positive opening on Monday, the markets closed in the red. Among the index heavyweights, RIL, HDFC, Hindalco and Tata Steel were the major losers. Auto stocks survived the carnage on back of impressive monthly auto sales numbers with Hero Honda and Bajaj Auto being the major gainers.
Tuesday was no better with the Sensex hitting a low of 15,709. However buying in RIL and few other stocks ensure that the indices closed with minimal losses.
On Wednesday, the market slipped for the fourth consecutive trading session and almost all the BSE Sectoral indices slumping. The Nifty slipped closed below the 4,600 mark for the first time since mid-March 2008. The market breath was also very weak as 1,944 stocks declined while 700 stocks advanced and 75 stocks stayed unchanged. The Sensex ended 447 points lower to close at 15,514 and the Nifty index lost 130 points to close at 4,585.
Thursday brought cheer to the market with the Sensex and Nifty closing in positive territory. It was a steady start to the day, after which key indices turned highly volatile and witnessed wild gyrations during the session. The Sensex hit a low of 15,314 in the mid-afternoon trades. It was in the last hour of trading that the market recovered. IT stocks were in the limelight as were Power, FMCG and select Telecom stocks.
On Friday, the bears were out again. The market was volatile the entire day before closing in the red. The Sensex closed at 15,572.18 after hitting an intraday high of 15,970.70 and a low of 15,526.50. Selling was witnessed in in FMCG, realty, metal, banking and pharma stocks.