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Smart Recovery

After witnessing massive fall on the first day of the week, the markets were on the recovery path for the rest of the days. Fear of interest rates continues to loom large

After closing the week (March 26-March 30) slightly down, the beginning of the new week (April 2-April 6) witnessed a bloodbath.

On Monday, the markets felt a severe jolt with Sensex plunging by 616 points and Nifty by 188 points. The panic selling was triggered by the RBI Governor's decision to hike the CRR and reverse repo to tame inflation. Soon after trading began on Monday, the Sensex had plunged 5 per cent to close at 12455.37, its six-month low. The most hit were the banking stocks. Corporation Bank and OBC fell by 10 per cent. The interesting trend that came to fore was that companies with low borrowing costs or zero debt like Nestle, GSK Consumer, Century Enka etc withstood the shock.

On Tuesday (April 3), there was some recovery though investors remained jittery about the RBI impact on interest rates. The stiff resistance put up by the bulls was mainly on account of the buoyant mood in world markets. The Sensex rose 169.21 points to close at 12,624.58 while Nifty was up 57 points to close at 3690. BHEL and NTPC surged over 4 per cent. BSE PSU index also made good gains. Other stocks like IVRCL Infrastructure, IFCI, SAIL and Balrampur Chini rose on the back of higher volumes. The BSE IT index also made good gains with frontline technology companies rising 2-3 per cent. Some buying was also witnessed in Hero Honda, Maruti Udyog and Mahindra and Mahindra.

On Wednesday (April 4) the markets continued with their rise. The major indices gained 1 per cent each. Sensex surged 162 points to close at 12786.77 and Nifty closed 42 points higher at 3733.25 points. The rupee touched the eight-year high of 42.84 per US dollar, gaining more than 100 paise in a fortnight. While this would make imports cheaper, exporters were apprehensive. Gains in the indices were mainly driven by selective buying in capital goods, healthcare and banking. Cement stocks reacted negatively to the news of government freeing imports of the commodity. The recovery in sugar stocks continued on the news of ethanol contracts won by second rung companies like Uttam Sugars, Uppar Ganges Sugar and Dhampur Sugars.

On Thursday (April 5) the markets opened on a subdued note as investors were wary of making fresh purchases. It was the day of the metal stocks to shine. BSE metal index rose 3 per cent. Firm metal prices internationally led the surge in metal stocks. Nickel was at an all time high on the LME. Tata Steel gained over six per cent to close at Rs 465, Hindustan Zinc jumped 4.7 per cent, Hindustan Copper was up 5 per cent and Hindalco was up 1.34 per cent. The Sensex gained 69 points to close the last trading day of the week at 12,856.08 while Nifty closed at 3,752, up 19 points.

Stocks of financial institutions like SBI, HDFC, ICICI Bank and HDFC Bank made good gains. There was some renewed interest in cement stocks.

The breadth of the market was positive. Of the 2,578 stocks traded on the BSE, as many as 1,651 stocks advanced, 856 stocks declined and 71 stocks ended unchanged. Except the BSE Oil and Gas Index, all other sectoral indices closed higher.

Markets remained closed on April 6 on account of Good Friday.