It was bound to happen. Bulls had run too fast and too high. In the week ended January 7, they slipped in the negative zone.
Volatility ruled the stock markets, as the 30-stock BSE Sensex suffered its highest weekly loss since mid-May 2004. The index shed 2.76 per cent to close at 6,420 points. Nifty was no different--it lost 3.12 per cent to end the week at 2015.50 points.
The first trading day of the week and the New Year had started on a positive with both the indices gaining over 1 per cent. After that, it was all red except for Friday when the markets recovered marginally.
Profit booking, selling pressure from FIIs, slump in the international metal prices and fear over Fed rate hike contributed to the sharp fall in the markets.
Among the broader indices, the S&P CNX 500 dived 2.60 per cent, while the CNX Mid Cap 200 lost 0.62 per cent in the week ended January 7, 2005.
Ambani brother continued to hit headlines this week as well. However, news on Friday that the duo was close to settling the dispute helped Reliance stocks as well Sensex recover some ground. Reliance Industries, which has the second highest weightage in the index, rose 1.32 per cent over the week, while Reliance Energy too added 0.70 per cent.
Among the broader indices, BSE Metal Index dipped over 6 per cent in the week after a slump in the metal prices in international markets. SAIL and TISCO lost 4.87 and 6.30 per cent, respectively. Hindalco slumped 7.22 per cent over the week.
BSE Bankex, which had gained over 3 per cent in the last week of 2004, was under pressure from sustained selling and profit booking--the index lost 4.19 per cent this time. Index heavyweight the State Bank of India lost 5.71 per cent. HDFC Bank and ICICI Bank too shed 5.66 and 3.24 per cent, respectively.
IT stocks suffered ahead of the December quarter results with the BSE IT Index ending the week down 2.50 per cent. At the end of a volatile week, software major Infosys lost 1.82 per cent. Wipro and Satyam Computers lost more at 6.49 and 5.51 per cent, respectively.
The BSE Healthcare Index lost the most at 5.04 per cent. The BSE PSU and FMCG indices too ended in red with a loss of 3.70 and 1.32 per cent, respectively. Telecom Regulatory Authority of India decision to cut ADC on domestic and international calls resulted into heavy losses for MTNL--the stock dived over 7 per cent in the week.
The combined daily average turnover on both exchanges jumped over 18 per cent to Rs 8,341 crore in the week ended January 7. FIIs and mutual funds turned out to be net buyers and pumped in Rs 564 and 205 crore, respectively.
Outlook
With FIIs on a selling spree for the last two trading sessions, profit booking might drag the markets down. Speculation over the forthcoming third quarterly results of companies would also rule the sentiments in the week.
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