Stocks fell again, belying hopes of a gain after Ayodhya crisis. The BSE Sensex lost 101 points (2.8%). Nifty was down 31.75 points (2.70%). Though mid-week, gains in index heavyweight partially recovered losses, but by close lost ground again. The visible fragility of the coalition government scared markets. The holiday season ahead added to the dullness.
Volumes at BSE dipped to Rs 916 crore, lowest in four months. Investment caution was visible in dipping combined trading volume, which was down 15 percent than previous week. The institutional activity was also lackluster. Foreign funds bought equities worth Rs 16 crore, while domestic funds were net seller of stocks worth Rs 65 crore.
But the bright spot in an overall depressed market were the second-tier technology stocks. Market optimism was visible in Mascon Global, Tata Infotech, and Visualsoft. In three-weeks, the gains amongst the second-rung stocks ranged between 13% to 48%. Remarkable against the 4 percent average gain in large-cap stocks like -- Infosys, Satyam and Wipro.
This week, there was good news for banks, as they do not have to seek RBI permission before issuing bonus and rights, besides the pricing of same has also been left to banks. This could prove a sentiment booster in banking stocks. This week, Punjab National Bank went public with its Rs 164.49 crore equity issue at a premium of Rs 21. Response to the issue could well rekindle interest in the bank stocks. Most other public sector bank issues in recent years have been a laggard in the market.
A short trading cycle in the coming week and the financial year-end is likely to dampen the sentiments and volumes. The start of new financial year, annual result season and relative stable government could prove to a turning point and help the market gain direction.