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Status Quo

Indian stock markets continued to post a loss this week too. The reason wasn't difficult to find: tensions in the Gulf region. In contrast, the US markets made a U-turn this week, with both the Nasdaq and the Dow Jones registering gains.

Tensions in the Middle East continued to hang heavy on the Indian stock markets, which headed in the southward direction this week too. The BSE Sensex lost 1.4 per cent and the Nifty fell 1.7 per cent over the week. The S&P Mid-cap Index lost 1.8 per cent and the S&P CNX 500 was down 1.6 per cent indicating that stocks lost across-the-board. However, in the US -- in a reversal of previous week's trend – both the Nasdaq and the Dow Jones registered gains, up 2.6 per cent and 1.5 per cent, respectively.

Following in the footsteps of other indices, the BSE IT Index too shed 1.2 per cent over the week. However, some IT stocks did manage to make some gains during the week. Hughes Software Systems was up 7.2 per cent on the back of an outsourcing order the company got from Lucent Technologies. On the other hand, I-Flex Solutions -- which won a contract from IMF for its treasury department – was down 3.3 per cent. Among IT heavyweights, while Wipro and Satyam lost 2.5 per cent and 5 per cent, respectively, Infosys gained 1.4 per cent over the week.

Among other developments that took place this week, pharma company Divi's Laboratories became a listed company -- at a premium of over 25 per cent to the issue price of Rs 140 -- on Tuesday. Among other pharma stocks, Ranbaxy fell 5 per cent pulling the BSE Healthcare Index down by 2.3 per cent for the week. The gloom was evident among FMCG stocks too, with sector majors like Hindustan Lever and ITC losing 2.7 per cent and 1.2 per cent, respectively. As a result, the BSE FMCG Index was down 1.8 per cent over the week.

Disinvestment blues continue to bother HPCL and BPCL. Both stocks that gained on the first trading day ended the week in negative zone. HPCL lost 3.1 per cent and BPCL was down 2.5 per cent. Heavy trading volumes were witnessed in both these stocks on Thursday.

PSU banks, however, witnessed action on expectations of a raise in FII ceiling. On Wednesday, trading volumes in Punjab National Bank (PNB) doubled while in the case of Union Bank it was six times higher than other trading days. Such aggressive buying helped Union Bank gain 9.2 per cent and PNB 7.5 per cent over the week. Among private banks, HDFC Bank remained nearly flat while ICICI Bank lost 1.6 per cent.

The FIIs remained cautious over the week. In a week, which had four trading days, the FIIs bought equities worth Rs 5.3 crore. In comparison, mutual funds had bought equities worth Rs 48 crore by Wednesday.

Outlook
A precarious global scenario -- due to tensions in the Gulf region – will continue to affect markets sentiments. The sentiments are unlikely to improve, at least not immediately.