Banking stocks were hit this week in anticipation to the RBI's credit policy meet and in reaction to their announcement of raising the repo rate
03-Feb-2007 •Research Desk
The markets remained almost flat over the week ended February 2 with the BSE Sensex and Nifty both gaining a meager 0.85 per cent each. In a week that saw the biggest takeover in the country's history by Tata Steel and the RBI's credit policy, the BSE CD index and BSE Tech index topped the return charts gaining 4.08 per cent and 2.92 per cent, respectively, among all sectoral indices. On the other hand, BSE Metal index was down 1.75 per cent followed by BSE FMCG index (down 1.58 per cent) and BSE Bankex (down 0.55 per cent).
On Monday, the Sensex and Nifty both closed in the red at 14,212 (down 71 points) and 4,124.45 (down 23.25 points), respectively. Index heavyweights like ICICI Bank, ITC, Wipro, Tata Motors, SBI, Bharti Airtel, HLL and ONGC dragged the indices down. Banking stocks ended on a weak note ahead of the RBI's credit policy meet on January 31. ICICI Bank, SBI, HDFC Bank, BoB, OBC and Corporation Bank were the major losers.
The markets remained close on Tuesday on occasion of Muharram.
On Wednesday, the markets continued their slump. The Sensex shed 121 points to closed at 14,090.92 and the Nifty fell 41.75 points to end the day at 4,082.7. Banking stocks slumped as the RBI raised the repo rate by 25 basis points to 7.50 per cent. This was done to tame inflationary expectations and check high money and credit growth. The BSE Bankex fell 0.45 per cent during the day.
Metal stocks too fell. Concerns over the price paid by Tata Steel to acquire Anglo-Dutch steel maker Corus put pressure on the indices. The Tata Steel scrip lost around 11 per cent on Wednesday. The company announced that it would buy Corus for $12.14 billion - at 608 pence for a share - outbidding Brazil's CSN's offer of 603 pence. Other laggards of the day included Wipro, Tata Motors, HLL, Hindalco among others.
The RBI's growth projections for the current fiscal year rose to 8.5-9 per cent over its last estimate of 8 per cent. This brought some cheer to the market on Thursday. So on the first day of the month, the Sensex closed the day up 176.26 point at 14, 267.18 and the Nifty zoomed 54.5 points. Banking, telecom and cement stocks lent support to the market. Good news came from across the Atlantic too with the US Federal Reserves unlikely to further hike interest rates this year.
The markets gained for the second consecutive day on Friday. The Sensex touched a new intra-day high of 14,462.77 to close at an all-time high of 14,403.77, up 136.59 points from Thursday's close. Bharti Airtel was the largest gainer on the bourses surging 5.4 per cent, the scrip also touched its all-time high of 777 in intra-day trade.