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Markets Witness A Sharp Correction

Widespread profit-booking left the Sensex down by 3.41 per cent over the week. In the broader markets, the Nifty shed 3.48 per cent to end at 2,484.4 points

Equity markets lost heavily during the week ended October 14, 2005. The 30-stock BSE Sensex declined by 3.41 per cent to close at 8,201.73 points, while the Nifty also shed 3.48 per cent before ending at 2,484.4 mark. Among the broader indices, the S&P CNX 500 closed down 3.67 per cent, while CNX Midcap lost 3.32 per cent over the week. The sentiments turned extremely negative after ACC put up poor quarterly result numbers and widespread profit booking was witnessed across the market.

Equity markets ended flat after a volatile trading session on Monday. The Sensex lost 7 points to end at 8,484, while the Nifty shed 0.28 per cent to end at 2,567 points. Pharma major Dr Reddy's surged 2.45 per cent to emerge as the top Sensex gainer, while Infosys and ITC also gained around 2 per cent each. Mid-caps, though, remained weak, as the CNX Mid-cap index lost half a per cent to close at 3,787 points. Among the sectoral indices, BSE IT posted smart gains of 1.5 per cent. However, metal and PSU stocks lost ground. Hindalco shed close to 3 per cent to figure among the biggest losers.

Tuesday was the only day in the week when equity markets ended in green. The Sensex touched an intra-day high of 8,564 points before ending at 8,541, up 57 points. The Nifty too added 0.88 per cent to end at 2,589.55 points. SBI and Tata Motors led the list of gainers among the Sensex stocks, both gaining in excess of 3.5 per cent. On the hand, Dr Reddy's Lab, which was the top Sensex gainer of Monday, emerged as the top loser as it shed 3.17 per cent. Among the sectoral indices, Bankex was the biggest gainer as it surged around 2 per cent. Tech stocks also firmed up on the back of good results of some of the IT majors.

After a holiday on account of the festival of Dussehra, equity markets witnessed a sharp correction on Thursday. The Sensex ended at 8,377, down 164 points, while the Nifty shed more than 2 per cent to end at 2,537 points. Among the Sensex constituents, only three stocks ended in the positive territory- ITC, Cipla and BHEL. All the sectoral indices ended in red, as traders resorted to profit booking. BSE Metal Index emerged as the biggest loser, shedding 3.6 per cent. Ranbaxy lost a massive 6.29 per cent. The news of a court's decision against the pharma major contributed to its decline. Bucking the trend were some other pharma stocks like Pfizer, Lupin and Sun Pharma which ended in green.

Equity markets continued to lose heavily on Friday. The sentiments turned extremely negative as the Sensex shed a massive 175 points to end at 8,202. In the broader markets, the Nifty also shed more than 2 per cent before closing at 2,484 points. Disappointing quarterly results declared by ACC contributed to the weakness even as selling continued across the sectors. Gujarat Ambuja and ACC lost heavily to emerge as the top Sensex losers. Only three of the Sensex constituents managed to end in the positive territory. Among the auto stocks, Maruti lost over 4 per cent, while other auto majors- M&M and Tata Motors also lost in excess of one per cent.

Among the Sensex constituents, only two stocks including Cipla (0.27 per cent) and Infosys Technologies (1.22 per cent) managed to end in the positive territory over the week. On the other hand, the pack of losers was led by Ranbaxy Laboratories, which shed a massive 15.72 per cent over the week. Gujarat Ambuja (-11.13 per cent), Hindalco Industries (-9.96 per cent) and Grasim Industries (-7.90 per cent) were the next in line.

Among the sectoral indices, BSE Metal came under the hammer, losing 6.34 per cent. Pharma stocks also lost heavily as the BSE Healthcare index declined by 5.36 per cent. At the other end of the spectrum, tech stocks remained insulated from the market gyrations as the BSE IT index lost only 0.34 per cent. Strong quarterly numbers put up by some tech majors helped them absorb the shock with ease.

Foreign institutional investors turned net sellers during the week. While they withdrew Rs 752.8 crore, mutual funds bought stocks worth Rs 133.98 crore.

After witnessing a bloodbath, the equity markets are expected to tread cautiously and sentiments are likely to remain subdued at the start of the week. The story will unfold as corporates come out with quarterly numbers. A few good quarterly result announcements may set the ball rolling for the equity market yet again.