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Tech Stocks Lead Markets' Crash

Both Sensex and Nifty plunged over 3.5 per cent in the week ended April 15, 2005. Technology stocks were the hardest hit--the BSE IT Index lost over 7 per cent

Equity markets crashed in the week ended April 15, 2005. Influenced by the weak guidance of Infosys for the next quarter and a meltdown in the global indices, the BSE Sensex slumped by 220 points on Friday itself. Overall, the Sensex ended the week at 6248.34 mark, down 3.57 per cent, while Nifty skidded 3.69 per cent to close at 1956.30 mark on Friday.

In the four-day-long week, the bourses lost on Monday, tried to gain some momentum on Tuesday and Wednesday but the crash on Friday negated all the positives. Even the broader based S&P CNX 500 collapsed 3.17 per cent, while the CNX Mid Cap 200 was worse off by 2.57 per cent during the week.

The crash was led by the fall in tech stocks as the BSE IT Index lost a whooping 7.06 per cent. Metals scrips also saw a heavy decline--the BSE Metal Index fell by 4.7 per cent. BSE PSU Index lost 3.08 per cent, while BSE Bankex tumbled 2.21 per cent. The BSE Healthcare Index skidded 2.64 per cent. The BSE FMCG Index was best of the lot as it shed only 0.78 per cent.

Among the Sensex heavyweights, Wipro fell by a massive 9.3 per cent followed by 8.4 per cent fall of Zee Telefilms Ltd and 7.99 per cent decline of Infosys Technologies. Gujarat Ambuja Cements Ltd ended the week in green with an impressive 4.18 per cent gain, while Bajaj Auto was better off by 2.41 per cent during the week.

FII activity in the Indian equity markets remained subdued as they injected only Rs 83.8 crore. Mutual funds pumped in Rs 104.74 crore during the week. The turnover at the BSE and NSE declined drastically as the average ranged in the 5,200 zone. The public offer of 10 crore shares of Allahabad Bank was oversubscribed by 9.6 times. The offer price has been fixed at Rs 82.

Outlook
Equity markets are expected to trade cautiously in the coming week after the huge decline in the week ended April 15, 2005. The Q4 reporting season has just begun and much of the activity in the stock markets is likely to be governed by these results. Factors like FII inflows, trend in the global indices and international oil prices will continue to determine the markets' trend. However, the bourses are expected to recover from the current crash, at least in the first few trading sessions.