The euphoria of good performance reporting waned with the markets restrained around 3000 points. The BSE Sensex as well as the Nifty moved in tandem, with a gain of less than one percent, during the week. The 27-points gain on Sensex was mainly driven by the PSU and cement stocks, which constitute only 4.3% of the BSE Sensex. Institutional investors, domestic as well as foreign were net sellers during the week.
As ever, technology stocks continued their roller coaster ride. Early during the week they gained on hopes of Cisco's upbeat projections, dragged down mid week on a weak software export forecast by Nasscom and finally bounced back due to foreign institutional purchases. On the other hand the cyclical sectors-cement and automobiles brought cheer in the otherwise subdued sentiment. Buoyed by high cement demand projections for the current fiscal, the take over and a bulk export order rumors for the largest cement manufacturer, Larsen & Toubro (L&T), the traded volumes in key cement scrips surged massively. Triggered by institutional purchases, Larsen & Toubro cornered 10 percent of the traded volumes at BSE towards end and 35 percent of the NSE futures volumes in the maiden trading session. High October sales recorded by automobiles, particularly two-wheeler segment brought interest in the auto scrips also.
On the macro front, as the economic data fails to spark of optimism about the US recovery, federal reserve brought about a 50 basis point cut in the interest rates, thus bringing down the real interest rates to almost zero. Toeing the fed's act and the unending downward growth projections, the European central bank also reduced its interest rates by same magnitude. But the persistent lowering of interest rates- to boost up credit-offtake and beat the global recession should not last long as it pushes down the real interest rates and thus the savings appetite in the long run. Further with the Opec countries concerting to scale down production, it hints at a spurt in world oil prices and a shoot up in India's oil poll deficit account.
The futures trading in 31 scrips which kicked-off during the end of the week attracted Rs 89 crore volumes on NSE and Rs. 9 crore on BSE. The new derivative product will allow the market participants to carry forward their positions for 3 months, against the compulsory daily settlement in the physical markets. The drifting cash market hopelessly awaits the derivative segment to bring back the lost volumes, languishing at a fifth of the Badla days.