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Markets Sign Off '04 On A High

The Indian stock markets ended the historic 2004 in a festive mood, with the 30-stock BSE Sensex scaling new peaks on the New Year eve. Banking and pharma stocks led this week's rally

Bulls had a free run on the Dalal Street. The Indian stock markets ended the historic 2004 in a festive mood, with the 30-stock BSE Sensex scaling new peaks on the New Year eve. A broad-based rally helped the index close above the psychologically important 6,600 mark. The Sensex gained 1.61 per cent over the week to close at 6602.69 points. Nifty too added 0.86 per cent to sign off the New Year at 2080.50 points.

Among the broader indices, the S&P CNX 500 gained 1.73 per cent, while the CNX Mid Cap 200 continued its run and added 3.22 per cent in the week ended December 31, 2004.

Reliance stocks had a mixed week, even as Reliance Industries board announced to buy-back shares at Rs 570 per share after a meeting on Monday. Investors are still worried on the way the two Ambani brothers are opposing each other. During the board meeting on Monday, Anil Ambani had tried to stop the buy-back proposal. However, the 12-member board rallied behind Mukesh Ambani and gave a go ahead to the proposal. These developments are proving to be a huge drag for the company stocks. At the end of the week, while Reliance Energy lost 1 per cent, Reliance Industries gained 1.94 per cent.

Among the sectoral indices, the party continued on the banking counters. Finance Minster P. Chidambaram's statement that the government would soon announce the policy for FDI in private banks helped the BSE Bankex gain 3.19 per cent over the week. He said that the foreign banks might be allowed to hold up to 74 per cent stake in private banks. Over the week, Centurion Bank gained a massive 26 per cent, while Bank of Punjab surged over 13 per cent.

State Bank of India too gained over 7 per cent after it announced that it was planning to acquire a strong regional bank and open to acquisitions abroad as well.

Appreciating rupee continued to prove a drag for the technology counters. The BSE IT Index was up a marginal 1.13 per cent. At the end of a volatile week for tech stocks, Infosys and Satyam Computers managed a positive return of 1.71 and 0.24 per cent, respectively, while Wipro lost 1.19 per cent. TCS, though, managed a smart gain of over 5 per cent.

Helped by an active buying, the BSE Healthcare Index rose 2.80 per cent. Cipla surged 4.39 per cent, while Ranbaxy Laboratories and Dr Reddy's Laboratories gained over 1 per cent each. BSE PSU and FMCG indices too added over 1.5 per cent each.

After a 4.69 per cent gain last week, the combined daily average turnover on both exchanges declined 1.65 per cent per cent to Rs 7,025 crore. FIIs continued to be net buyers and pumped in Rs 767 crore in the Indian equity markets. Mutual funds too invested over Rs 100 crore.

Outlook
Markets are likely to react positively to the government's announcement that the GDP grew by 6.6 per cent during the July-September 2004 quarter and a low inflation rate of 6.5 per cent for the week ended December 18. However, with markets at their all-time high level, volatility and minor corrections can't be ruled out.