Last week's corrective trend gained momentum with the Sensex losing 2.18 per cent (129.55 points) to close the week at 5,816.64 points. The S&P CNX Nifty lost 57.45 points to close lower by 2.95 per cent at 1,847.55 points. Midcaps took a beating with the CNX Midcap 200 Index losing 5.79 per cent, while the broader BSE 500 closed lower by 3.91 per cent.
On all trading days, the Sensex moved over 100 points with the grand finale coming on Friday, where it gained 222.90 points. This was the second highest rise seen by the index on a single day in the last five years.
Average daily trading volumes at Rs 9,464 crore were similar to those seen in the previous week. Declining issues led the field on all trading days except Friday where advancing shares staged a comprehensive recovery, with ten shares gaining for every one, which was losing on the NSE.
Net FII inflows at Rs 467.2 crore were in line with those seen in the previous week. Moreover, FIIs were net buyers on all days, though the quantum of inflows was small on three trading days.
The week was a particularly bad one for FMCG and PSU shares. The BSE FMCG Index lost 6.02 per cent as index heavyweight HLL shed 4.90 per cent. ONGC, IOC and Sail, with losses of 4.07 per cent, 6.5 per cent and 5.57 per cent respectively, contributed to the PSU Index losing 4.68 per cent.
There were, however, no signs of the coming storm at the start of the week. Cyclicals, banks and auto scrips had a good start. SBI and ICICI Bank were among the prominent winners moving up by 3.8 per cent and 6.3 per cent respectively. Tata Motors and Hero Honda led auto stocks with gains of 4.4 per cent and 5.5 per cent respectively.
There was mayhem on the street in the next three trading sessions. The Sensex lost more than 100 points on a daily basis with all index heavyweights taking a pounding. SBI (-5.6 per cent), Tata Motors (-4.6 per cent) Tata Power (-6.1 per cent) were some of the significant losers on Tuesday.
By Wednesday there were ten stocks moving down for every one gaining on the BSE. There was major positive news on Thursday as Moody's upgraded India's foreign currency rating from junk to investment grade (Baa1). The rating agency has said that the upgrade was on account of a reduction in external vulnerability, rising foreign investment and vibrant economic growth. This did not figure in the market's calculations as the losing streak continued.
The issue of participatory notes, which was weighing heavily on the mind of investors was resolved after market hours on Friday. SEBI has ruled that foreign funds cannot issue participatory notes to unregulated entities from February 3, 2004. More importantly, the regulator has clarified that existing PNs issued to unregulated entities are not required to be terminated immediately. These PNs will be wound down on maturity or within a period of five years, whichever is earlier. As per SEBI's definition, regulated entities are those which come under the purview of their country's market regulator.
Friday also saw the markets snap out of its losing streak with the Sensex gaining 222 points. There were winners across the board with Infosys and Wipro rising 6 and 5.4 per cent respectively. This was sufficient to wipe out most of the losses of the BSE IT Index which ended the week 0.4 per cent lower. The BSE Healthcare Index ended 3.27 per cent lower and the BSE Bankex closed lower by 1.09 per cent.
With the issue of participatory notes resolved, it is hoped that stability will return to the market. FII numbers will remain centrestage as the results season continues.