Markets Deflate | Value Research It looked like a classic case of pre-Budget and F&O expiry jitters. Other factors like interest rates, inflation and steep valuations did not help calm fears

Markets Deflate

It looked like a classic case of pre-Budget and F&O expiry jitters. Other factors like interest rates, inflation and steep valuations did not help calm fears

The markets remained volatile this week. Hardly surprising given the hardening of interest rates, inflation concerns and steep valuations. Added to that was the Budget expectation and F&O expiry.

On Monday, both the major indices closed in the green. The Sensex closed at 14,402.90 and the Nifty at 4,164.55. Banking stocks were the star performers on hopes that the hike in lending rates would maintain profit margins. ICICI Bank, SBI, Corporation Bank, OBC and Canara Bank were the major gainers.

The Sensex had surged to a high of 14,479 during the day but heavy selling in frontline stocks like Hero Honda, Ranbaxy, Dr Reddy's Labs, BHEL and Reliance Communication brought it down. Among the non-Sensex stocks, Siemens, SAIL, Moser Baser and Parshvanath Developers were among the major losers.

On Tuesday, the indices slipped. The Sensex closed at 14,253.38 and the Nifty at 4,106.95. Zee Telefilms, ONGC, SAIL, SBI and RIL were among the major heavyweight losers. Tech, FMCG and auto stocks also took a beating. The Sensex was down 150 points as investors turned cautious ahead of the monthly expiry of derivative contracts on Thursday and the Budget next week. The NSE also ended 1.38 per cent lower at 4106.5 points. India's largest FMCG player, Hindustan Lever, lost 2.7 per cent after reporting fall in its quarterly numbers to close at Rs 199.

Despite wild gyrations during the day, the markets continued to slump on Wednesday. The Sensex closed at 14,188.49 and the Nifty at 4,096.20. Tech and FMCG stocks were the big losers.

Thursday - the day of F&O expiry - brought no relief for the bulls. The expiry of February derivatives contracts was mainly responsible for the sudden sell-off. In fact, it turned out to be a classic case of pre-Budget selling. Despite the fact that the market opened with modest gains, the Sensex and Nifty closed in the red. The Sensex had in fact gained 100 points in the morning session but ended in the red. Much of the sell-off came during the last hours of the trading. FIIs were net sellers to the tune of Rs 435.4 crore. The broader indices like BSE 100, BSE 200 and BSE 500 lost more than 1 per cent each. Sensex finally ended at 14021.31, down 167.18 points. Nifty closed at 4,040. Banking, auto and pharma stocks were hammered.

There was no let up in selling on Friday, February 23. This was the fourth consecutive day of loss. The Sensex moved in the range of 500 points during the day to end at 13,632.53, down 389 points. This was the lowest level in the last one-and-a-half months.

The Nifty slipped below the 3,950 mark and closed at 3,938.95. All the BSE sector indices ended in the red. The BSE Bankex was the worst hit shedding over 3 per cent. SBI, ICICI Bank, HDFC Bank, Bank of India, UTI Bank, PNB, Kotak Bank and Federal Bank ended in the red.

Cement stocks too were offloaded in large numbers on the rumours that the government may ban export of the commodity. Grasim Industries lost around six per cent and ACC was down 5 per cent. Bharti Airtel, Wipro and ITC were the other major losers.

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