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Markets Breathed Easy

After remaining volatile for the whole week, the stock markets finally celebrated Diwali by making a smart comeback. Nonetheless it was not strong enough to recoup the losses.

Despite a steep fall in Sensex, shrinking volumes, declining shares outpacing advancing shares--markets finally rejoiced on Diwali. BSE Sensex which had lost 5.71 per cent till Thursday, recovered by 3.30 per cent over next two trading sessions. S&P CNX Nifty was down 6.28 per cent till Thursday and managed to recover 3.50 per cent. Overall the Sensex and Nifty were down 2.59 per cent and 3.99 per cent over the week. The mid-cap indices had a better run—as CNX Mid Cap 200 Index and S&P CNX 500 were down 1.70 per cent and 2.97 per cent over the week. Though at a pace slower than last week, FIIs bought equities worth Rs 1256 crore while the domestic mutual funds were net sellers to the tune of Rs 347 crore.

Since May-end, Sensex have had a secular rise for 25 weeks--out which it registered a fall during 5 weeks only. Perhaps it was this persistent rise which worried investors who resorted to panic selling. The week itself started with a 1.59 per cent fall in Sensex. Infact the selling spree wiped off 2 per cent on Tuesday and Thursday, while Wednesday was a savior as the Sensex could restrict its losses to 0.31 per cent. Huge open position in the derivatives segment ahead of expiry of futures on October 30 was also reported to have triggered the selling.

But the loosing streak came to end on Friday when Sensex rebounded by 10.8 points. The faith in strong economic fundamentals and quarterly results from NIIT, Satyam restored the buying sentiment. In line with other software giants, Satyam computers also reported a more than expected increase in net profits and has raised the earnings guidance for the current fiscal. NIIT also reported a strong growth in its education and software business. The stock jumped by 10 per cent in a single trading session.

Finally, the expectation that new hindu financial year would see a sustained rise in markets, saw the Sensex gain by 45 points during the Mahurat trading session on Saturday. Though the sectoral indices managed to make a smart comeback, but the rally was not strong enough to recoup the week's losses. Over the week, BSE IT was down 5.53 per cent, BSE Healthcare Index lost 5 per cent while BSE FMCG and BSE PSU Index were less hurt as they lost a little more than 2.50 per cent each.

Outlook
The stock markets will continue to be driven by the quarterly results, as some of the index heavyweights like Hindustan Lever are yet to come with the numbers.