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Markets Gain Marginally

Stock markets reversed the two-week down trend last week, with the Sensex gaining 85.5 points, driven mainly by large-caps.

The ongoing correction in the stock market finally lost momentum last week as stocks appreciated in the last two trading sessions. The result: the BSE Sensex gained 1.57 per cent to 5528.94 points, while the Nifty advanced 1.3 per cent to 1747.5 points.

On the first trading day of the week, the BSE Sensex lost 78 points to close at 5365.4 points, the lowest close in 2004. The expiry of the derivatives contract on Thursday and year-end tax payment concerns spooked the market. On Tuesday, the trend reversed with the Sensex closing 35.59 points. Wednesday was a lacklustre day, with the Sensex losing 5.7 points. On Thursday, the market closed 19 points higher, but the rollover of open positions in the derivatives market was smooth. With no worries, speculators and investors bought stocks on Friday taking the Sensex 114.5 points higher.

Besides India's cricket team, its currency also shone last week. It ended at a near four-year high of Rs 44.47 to the dollar. This factor has affected software companies as most of their earnings have so far been dollar denominated. Among other important news, Bharti Tele-Ventures signed a $750 million outsourcing contract with IBM. ICICI Bank also announced its price band for its forthcoming public issue between Rs 255-295.

The decline in trading continued last week too, with the combined turnover falling to Rs 6003 crore, down almost 17 per cent over the previous week. Among other indices, the S&P CNX 500 gained 0.6 per cent, much lower than the large-cap Sensex or Nifty. The CNX Midcap was still down 0.8 per cent, indicating that the trend in mid-caps is still down.

In sectoral indices, the BSE Bankex gained 4.3 per cent due to renewed buying when government officials ruled out the possibility of inflation rising above 5 per cent. BSE IT Index rose 0.6 per cent and the BSE PSU Index gained 0.38 per cent. BSE Healthcare and BSE FMCG closed lower than previous week.

FII investments was at Rs 1,100 crore, up 43 per cent. Mutual funds were net sellers at Rs 24 crore. In global markets, the Dow Jones gained 0.26 per cent, while the NASDAQ was up 1 per cent.

Outlook
The markets have risen cautiously last week, and concerns of outstanding positions in the derivatives market are also over. There seems to be a temporary bottom and markets are likely to go up next week. Expectations of full year results will drive the markets as we go into April.