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Nervous breakdown

Geopolitical factors are taking toll on the markets. Both the Sensex and the Nifty lost a massive 5 per cent over the week

As Israel pounded Lebanon, oil was on boil and equity markets caught cold.

Markets are playing musical chairs. One week it goes up and another week it is down to hit back again. After last week's gains, markets were down again for the week ended July 21.

Nifty was down 5.71 per cent, while the Sensex lost 5.55 per cent during the week ended July 17. Among the broader indices, S&P CNX 500 lost 6.57 per cent, while the CNX Mid Cap ended the week down 6.12 per cent. CNX Mid Cap had lost 0.17 per cent in the week under review.

All the sectoral indices ended the week in red. The Metal index was the top loser, shedding a whopping 8.62 per cent over the week, followed by PSU index (-6.21 per cent), FMCG index (-5.85), IT Index (-4.81) and Healthcare index (-2.03 per cent). The BSE Bankex was down 1.83 per cent during the week.

On Monday the fear of rising oil prices in the wake of geopolitical factors hit the markets hard. The Sensex lost 385 points, or 3.6 per cent, and Nifty lost 115.80 points, or 3.7 per cent, from their last close. Investors feared that the rising crude oil prices could trigger a slowdown in the economy. Automobile stocks took most of the battering due to the disappointing first quarter results from Bajaj Auto. Higher crude prices also pulled the rupee down to a three-year low of 46.75 against the dollar. Bajaj Auto fell 4.7 per cent to Rs 2,520.90 while Maruti and Tata Motors lost around 5 per cent each. Hero Honda was the outperformer in the auto sector on Monday, falling only 1.2 per cent.

On Tuesday (July 18) the markets were down for the fourth day in a row. The Israel-Lebanon showdown continued to cast its shadow over the markets. The Sensex closed at 1,0226.78, down 66.44 points or 0.65 per cent, after touching a high of 10,406.43 points. The 50-share Nifty ended at 2,993.65, down 14 points, or 0.46 per cent. Some analysts were expecting that weakening the rupee would boost the bottom lines of technology stocks. Wipro was up around 1 per cent while Infosys and Satyam rose around 1.5 per cent each. TCS was down 2 per cent while Sensex heavyweight Reliance Industries shed 2.5 per cent. The net sales by FIIs stood at Rs 567.60 crore. Mutual funds were, however, the buyers to the extent of Rs 142 crore. The combined market turnover on both the exchanges stood at Rs 8,261 crore.

There was no stopping for the markets from falling for the fifth consecutive day on Wednesday (July 19). Both the indices witnessed massive falls on July 19. The Sensex went below the 10,000-mark intra day, touching a low of 9,972.73. It recovered later to the end day at 10,007.34. The Nifty dropped 60.90 points to close at 2,932.75. There was selling all around after reports that Israeli troops had entered Lebanon. The good numbers posted by Wipro, ACC and TCS also did no good to the market. ONGC was the top gainer adding 2 per cent. FIIs were net sellers to the extent of Rs 307 crore, while mutual funds sold to the extent to Rs 125.55 crore.

Finally on Thursday, brakes were applied to the continuously falling markets. The Sensex recorded impressive gains of 345.60 points, or 3.4 per cent, to close the day at 10,352.94 points. Nifty was up 90.30 points. The recovery followed strong overseas markets. The rupee also recovered some ground against the dollar. The first quarter results of Ranbaxy, Gujarat Ambuja and Reliance also helped the markets to strengthen. Ranbaxy was the top gainer of the day among Sensex stocks, rising 7.5 per cent to Rs 349.90. FIIs were net buyers of equities worth Rs 90 crore while the mutual finds were net sellers to the extent of Rs 80.13 crore. All 30-Sensex shares were gainers. Investors put their attention on large-cap stocks causing midcap and small-cap shares to underperform.

On Friday, most of the investors came to know that Thursday's high was an aberration. The markets again headed southwards. Investors booked profits wherever possible ahead of RBI meeting on Tuesday where they expect the central bank to hike interest rates by 25 basis points. Other key Asian markets were also weak. The Sensex closed at 10,085.91, down 267.03 points, or 2.6 per cent, while the 50-share Nifty ended at 2,932.75, down 78 points, or 2.6 per cent. Even the robust quarterly results of various companies failed to reassure the investors. The biggest loser on the BSE was L&T, shedding 5.2 per cent despite posting robust growth in net profit.

Mutual funds were net sellers of equities worth Rs 101 crore while FIIs offloaded equities worth Rs 807 crore over the week.