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Old Story, New Year

A new year and the indices have touched new milestones in the very first week. However, the volatility continues

The first trading day of the year saw the bulls storming into 2007. Buying activity in Satyam Computers, M&M, Infosys, RIL, Bharti Airtel, SBI and TCS cause the Sensex to close higher at 13942.24 and the Nifty to cross the 4,000 mark to close at 4007.

FIIs were net buyers to the tune of Rs 331.8 crore but mutual funds were net sellers to the tune of Rs 7.98 crore.

On Wednesday, the bulls continued to dominate and the Sensex crossed the 14000 market closing at 14014.92 and the Nifty at 4024. But it was not an easy ride. After touching 14000, selling pressure was witnessed in ACC, ABB, M&M, Tisco, ONGC and ICICI Bank. But buying in technology, auto, banking and pharma stocks ensured that the indices closed higher. FIIs bought heavily to the tune of Rs 3, 353.3 crore (net) and so did mutual funds to the extent of Rs 198.04 crore (net).

The bears came out to celebrate the new year on Thursday. The Sensex and Nifty closed lower at 13871.71 and 3989 respectively. FIIs continued to be net buyers but to a lower limit of Rs 207.8 crore. Mutual funds were net sellers to the tune of Rs 21.42 crore.

Mid-caps were doing well with the CNX Mid Cap closing at 5175.25 on Tuesday and moving higher to 5227.25 by Thursday.

On Friday, the Nifty slipped slightly lower to close at 3983 and the Sensex slipped to close at 13860.52. The CNX Mid Cap too dropped to close at 5212.55.

All through the week, the turnover on the BSE kept increasing consistently over the week from Rs 3,380.94 crore on Tuesday to Rs 4,545.3 crore on Friday. The same case for the turnover on the NSE from Rs 5, 938.27 crore on Tuesday to Rs 8556.02 crore by Thursday.

The biggest gainers this week were Bajaj Auto and Ranbaxy while the biggest losers were ITC and Reliance Communications.

Looking into 2007
Despite the stock market crashing in May last year, the Sensex delivered an annual return of 46.7% and the Nifty, 40%. But most are unanimous on the opinion that the days of such returns are over.

Though the long-term outlook remains strong, there are some key factors that should drive the market. The Budget being one of them.

In the near future, it is the latest quarterly results that will impact the market, with Infosys doing so on January 11.

The quarterly review of the monetary policy on January 31 is also fairly significant if the RBI decides to hike short-term rates again.

Another crucial factor is the FII inflows to the emerging markets and India.