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Selling Pressure Drags Markets Down

The 30-share BSE Sensex closes down 3.03 per cent, while Nifty loses 3.30 per cent. BSE FMCG, though, ends in the positive territory

After a brief recovery in the previous week, the equity markets tanked in the week ending April 29, 2005, amid sustained selling pressure from the retail as well as foreign institutional investors. Even encouraging results by most of the corporates have failed to lift the sentiments. The 30-share BSE Sensex lost 3.03 per cent, closing at 6154.44, while Nifty fell 3.30 per cent to 1902.50 mark.

Equity markets lost the most on Friday after the Annual Policy Statement announcement on April 28, 2005. A hike in the reverse repo rate by 25 bps to 5 per cent has ignited the fears of hardening interest rates in the short term. Following this, banks and manufacturing sector stocks declined amid worries of a dent on their bottomlines. As a result, the BSE Bankex slipped 6.36 per cent over the week.

Broader indices including CNX Midcap-200 lost 2.46 per cent at 2774.30, while the S&P CNX 500 lost 3.07 per cent to 1688.65 mark.

Among the sectoral indices, the BSE FMCG was the only index to close in the positive territory. The index gained 2.90 per cent at 1111.78. FMCG major HLL announced that its profits had dipped by 15.13 per cent. However, the stock price of the company gained 4 per cent over the week. Among other FMCG companies, ITC and Dabur also clocked smart gains on the back of encouraging results.

The top loser among the sectoral indices was the BSE Metal Index that lost 6.49 per cent, followed by BSE Bankex (-6.36 per cent), BSE IT (-4.18 per cent) and BSE PSU Index (-4.06 per cent).

The futures expiry on April 28, 2005, also weighed heavy on the equity market sentiments. Despite smooth expiry of the April futures, the May series futures contracts continued to trade at sharp discount to the spot market, indicating a bearish view of the market by traders. Foreign funds remained big sellers in the F&O segment for most part of the week.

The FIIs remained net sellers for the second consecutive week with net sales of Rs 501.80 crore, whereas the mutual funds were net buyers to the tune of Rs 266.33 crore.

The week also witnessed debut of the leading apparel exporter Gokaldas exports on the stock markets. The stock opened at a 33 per cent premium over its issue price on the April 27, 2005. At Friday's close of Rs 639.50, the stock was traded at a 50 per cent premium over its issue price.

Among the key gainers on the NSE were Cipla, VSNL, HLL, ITC and Dabur. The top losers include HCL Tech, ICICI Bank, Nalco, PNB and Maruti.

Outlook

Next week's results would play a crucial role in deciding the direction of the market in days to come. However, the markets are likely to trade cautiously ahead of the Federal Reserve meeting early next week. Easing international crude oil prices can offer some respite to the weak markets' sentiments.