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Festivities Return to Equity Markets

Equity markets started the week ended January 28, 2005, on a shaky ground but ended with a bang. Helped by active buying and good third quarter results, the markets surged

Equity markets started the week ended January 28, 2005, on a shaky ground but ended with a bang. Helped by active buying and good third quarter results by some companies, the 30-stock BSE Sensex surged 3.81 per cent over the week to close at 6419.09 points. Nifty too zoomed 4.31 per cent at 2008.30 points.

When the week had started, it seemed that equity investors would once again have a depressing week--on Monday, the Sensex fell nearly 78 points. However since then, some good company results and favourable inflation data changed the trend. On Friday, the index touched an intra-day high of 6432.58 points before finally settling up 179 points at 6419.09. It was the highest single session gain since May 18 last year when Sensex had zoomed nearly 371 points.

The stock markets fired from all cylinders this week. Broader indices including the S&P CNX 500 and CNX Midcap reversed their three-week losing streak to register some smart gains this time. While the former added 3.86 per cent, the midcap index surged 4.04 per cent.

Sectoral indices too rallied. Technology stocks got their edge back. The BSE IT index surged 4.34 per cent-the highest gain in the past 28 weeks. Satyam Computers led from the front-the stock gained over 10 per cent over the week. Infosys Technologies, Wipro and TCS too clocked a gain of over 3.5 per cent each.

Down for three successive weeks, pharma stocks regained their health. The BSE Healthcare Index surged 4.19 per cent. Pharma major Ranbaxy Laboratories was in the pink of health. Under pressure from the recent sell off due to a disappointing result, the stock made a strong comeback this week and surged over 9 per cent. Cipla and Dr Reddy's Laboratories too registered gains.

Banking counters were on fire. State Bank of India beat the market expectations to post a third quarter gain of 20 per cent at Rs 1,099 crore. Punjab National Bank too declared good numbers. As a result the two stocks surged handsomely and ended the week up 8.07 and 7.81 per cent, respectively. Several other private as well as public sector banks also saw action. The BSE Bankex ended the week up 3.94 per cent.

FMCG stocks continued their great run. P&G announced on Friday that it would buy Gillette for about $57 billion. Consequently, the stock surged 7.02 per cent. HLL too gained 7.74 per cent. The BSE FMCG Index rose 4.02 per cent.

BSE PSU Index too was on song. The index gained 3.90 per cent after the Central government made fresh announcement on its disinvestment plans.

The combined daily average turnover on both exchanges rose 6.91 per cent to Rs 7,226 crore in the week ended January 28, 2005.

Though foreign institutional investors (FIIs) continued their selling spree and booked profits worth Rs 255 crore over the week, they reversed trend on the last trading day of the week and pumped in Rs 199 crore. Domestic mutual funds, however, found the markets attractive and bought shares worth Rs 133 crore.

Though the markets gained continuously on Friday to end in the green, it's no way be called as the end of the volatility that the markets had seen of late. In fact good numbers released by some companies fuelled a rally this week. This might happen next week as well. But caution is the word going forward.