The equity markets crashed in the week ended March 24, 2005, on slowdown in the FII inflows. While the BSE Sensex plunged 3.84 per cent to end the week at 6442.87 points, Nifty skidded 4.44 per cent to end the week at 2015.4 points.
The slide compounded as traders and high net-worth individuals took year-end winding up positions. The US Federal Reserve's decision to hike interest rate led to a major setback in the stock markets globally.
The fall was more pronounced in the broad based S&P CNX 500 and CNX Mid Cap 200 which declined by 4.88 and 5.28 per cent, respectively. Among the sectoral indices, BSE FMCG was the only index that could end the week on a positive note though the gain was a meagre 0.04 per cent, thanks to a 3.34 per cent rise in HLL. BSE Bankex was the worst hit among sectoral indices as there was a huge decline of 7.09 per cent. India's biggest bank SBI lost close to 8 per cent during the week. The BSE PSU Index saw a decline of 6.36 per cent while BSE Metal Index went down by 6.38 per cent. The BSE IT index saw a correction of 3.29 per cent, while the BSE Healthcare index closed down by 2.84 per cent.
The share prices of Reliance Industries saw some consolidation amid the news that a settlement would be reached between the Ambani brothers. A 9.5 per cent skid in the share prices of Tata Power and 8.2 percent fall in HDFC stock prices contributed the most to the fall in the Sensex.
FIIs reversed their trend of pumping huge chunks of money in the Indian equity markets and turned heavy sellers on Wednesday and Thursday. Overall the net inflows amounted to a mere Rs 6.10 crore. Mutual funds on the other hand seized the opportunity of a falling market to deploy the money that the recent IPOs had gathered in the last few months. They were buyers to the tune of Rs 387.05 core.
Outlook
The stock markets are likely to trade cautiously ahead of the financial year-end sentiments and rise in interest rates by the US Federal Reserve. This, coupled with a surge in the US dollar, could lead to further slowdown in the FIIs inflows as US-based foreign investors could decide to return to their homes to take advantage of the improving scenario. Further, the implementation of VAT in the 21 Indian states could have repercussions on the equity markets.
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