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Volatility Rules Dalal Street

The week ended May 26 could have unnerved even the most dedicated stock investors. Though the Sensex signed off the week losing just 1.18 per cent at 10.809 levels, it had wild swings in between

The week ended May 26 could have unnerved even the most dedicated stock investors. Though the Sensex signed off the week losing just 1.18 per cent at 10.809 levels, it had wild swings in between. At one point in time, it had crashed over 1,100 points intra-day forcing the markets to close for an hour. Huge sell-off by FIIs, weak commodity prices and global markets triggered the fall. The Nifty lost 1.15 per cent over the week. Among the broader indices, the S&P CNX 500 closed 1.49 per cent down, followed by 2.79 per cent drop in CNX Midcap index.

Markets had a disastrous start to the week. The Sensex fell over 10 per cent but managed to stage a recovery on Monday. Still, it closed 4 per cent or over 450 points down. Such was the panic that trade had to be suspended for an hour. However, once the trading resumed, buying interest in bluechip stocks and statement by finance minister that everything was all right helped recovery. Sitting on huge cash pile, mutual funds supported the markets rebound. Finally, the Sensex closed at 10,481.77 points or 4.18 per cent down. Earlier in the day, it had crashed to 9,826.91 levels.

Tuesday brought some respite. Shares bounced back more than 3 percent and the fears of yet another meltdown subsided a bit. Buying interest by domestic institutions and retail investors after a sharp correction supported the market, as the BSE Sensex ended the day at 10,822.78 points. However, the volatility continued.

Selling by FIIs led yet another fall on Wednesday. Investors chose to stay away ahead of a monthly expiry of derivatives contracts. FIIs sold stocks worth more than Rs 1,243 crore. The 30-stock BSE Sensex dropped nearly 250 points over the day to close at 10,573 levels.

While the turbulence continued, markets managed to gain on Thursday. Sentiments improved on back of a smooth rollover in monthly derivatives contracts. The BSE Sensex ended at 10,666.32 points or 0.88 per cent higher after trading in the red through the day. And when the markets closed on Friday, there was no sign of the bloodbath on Dalal Street. The Sensex closed up 1.34 per cent at 10,809 levels.

Among the 30 Sensex stocks, 18 ended the week in the read, while 12 managed to buck the trend to close with gains. Tata Steel led the pack of gainers-the stock rose 6.90 per cent. Among the sectoral indices, the BSE Metal index rose 2.47 per cent despite the initial hammering.

The combined daily average turnover on BSE and NSE fell 9.85 per cent to Rs 12,820 crore. The FIIs pulled out over Rs 7,100 crore, while domestic mutual funds pumped in Rs 2,500 crore over the week.