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Sensex Misses 6,800 Mark

After a volatile week, while the 30-stock BSE Sensex gained 33 points to close at 6781.99, the Nifty slipped four points to close at 2090.60

Volatility ruled equity markets' sentiments in the week ended June 10, 2005. While the 30-stock BSE Sensex gained 33 points to close at 6781.99, the Nifty slipped four points to close at 2090.60 mark.

Markets gained on Monday. After trading higher in the morning session, the Sensex closed nine points up at 6758.19. The Nifty closed 1.45 points down at 2092.80 mark. Led by technology and banking stocks, markets extended gains on Tuesday and Wednesday. On Thursday, markets came under selling pressure. While the Sensex ended the day at 6,832, down 26 points, the Nifty closed at 2,103, down nine points. Banking and technology stocks remained weak on the back of profit booking. Friday was no different. Equity markets could not sustain initial gains and slipped in the afternoon session on strong volumes to finally close in the red.

Among the Sensex constituents, TISCO, ONGC and Tata Motors led the pack of losers with a loss of over 3 per cent each. HDFC dominated the pack of gainers with over 11 per cent rise. Reliance Energy and HDFC Bank too surged 7.95 and 5.49 per cent, respectively.

Midcap stocks continued their good show. The CNX Midcap 200 gained 1.90 per cent over the week.

Banking stocks gained strength after the Reserve Bank of India allowed banks to finance acquisition of equity in overseas companies. According to an RBI notification, "banks can extend financial assistance to Indian companies for acquisition of equity in overseas joint ventures/wholly owned subsidiaries or in other overseas companies, new or existing, as strategic investment, in terms of a board approved policy, duly incorporated in the loan policy of the bank." Earlier, Indian banks were at a disadvantage as corporate clients approached foreign banks as foreign banks used to provide this service through their overseas branches. This led to a 3.58 per cent rise in the BSE Bankex.

All other major sectoral indices ended in red. While the BSE IT and BSE Healthcare indices slipped 1.19 per cent each, BSE FMCG Index reversed its four-week gaining streak to end down 0.96 per cent. BSE Metal and BSE PSU indices too closed 1.06 and 0.19 per cent down, respectively.

The combined daily average turnover on both exchanges went up 7.52 per cent to Rs 6403 crore.

Both foreign institutional investors and mutual funds were bullish in the week ended June 10. While the former injected Rs 783 crore, mutual funds invested Rs 58 crore.

Outlook

Correction may continue during the early part of the week. However, with both FIIs and mutual funds pouring money into the markets, we might see yet another positive week. Banking scrips may gain further on account of a favourable RBI decision allowing banks to finance acquisition of equity in overseas companies.