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A Dull Week for Equity Markets

After rallying for two successive weeks, equity markets moved in a narrow range in the absence of any substantial trigger and signed off the week ended February 11, 2005, on a flat note

After rallying for two successive weeks, equity markets moved in a narrow range in the absence of any substantial trigger and signed off the week ended February 11, 2005, on a flat note. While the 30-stock BSE Sensex gained 0.23 per cent to settle at 6,633.76 points, Nifty added 0.20 per cent to close at 2,082.05 points.

The rally continued in the mid-cap stocks. The CNX Midcap 200 surged 3.13 per cent over the week. S&P CNX 500 also closed up 1.07 per cent.

FMCG stocks lost. Led by a sharp decline in HLL stock price, the BSE FMCG Index fell 2.35 per cent over the week. The scrip shed more than 4 per cent after a disappointing third quarter result.

Pharma stocks saw marginal losses over the week with the BSE Healthcare Index closing down 0.22 per cent.

Banking stocks too gained. Led by a smart rally in stocks including SBI, ICICI Bank and HDFC Bank, the BSE Bankex surged 1.61 per cent. HDFC Bank received Reserve Bank of India (RBI)'s sanction to raise its exposure to the stock markets from 5 per cent of outstanding advances at the end of the previous year to close to 10 per cent. Consequently, the scrip surged 3.12 per cent on Wednesday.

Active buying was witnessed on the tech counters, with the BSE IT Index gaining 1.27 per cent. TCS stocks rose by more than 5 per cent over the week after the software major announced that it had won a Rs 341 crore order to computerise the government's registrar department. Infosys Technologies rose after its American Depositary Receipts gained 4.8 per cent on the NASDAQ. The BSE PSU and BSE Metal indices too gained.

The week also saw a fall in global crude oil prices that boosted the stock prices of oil refining-cum-marketing companies including HPCL and Indian Oil Corporation (IOC).

The government's recent decision on power sector reforms gave a positive direction to Bharat Heavy Electricals (BHEL) and Tata Power. BHEL gained 4.7 per cent to a lifetime closing high of Rs 818.45.

Breweries and distilleries firms ended the week on a high on speculation that the UB Group would succeed in taking over the liquor business of Shaw Wallace. Tyre makers including Ceat, Apollo Tyres and MRF also gained on active buying.

The combined daily average turnover on both exchanges declined by 15.34 per cent to Rs 7437.422 crore in the week ended February 11, 2005.

Foreign institutional investors were net buyers and pumped in Rs 879.9 crore, while domestic mutual funds bought stocks worth 46.39 over the week.

Outlook
Equity markets are expected to be range-bound ahead of the Union Budget. Traders are speculating that the finance minister would announce major tax concessions for the industry and is likely to cut taxes and excise duty on cars. If that happens, we may see a sustained bull run.