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The week in the stock markets

EVEN IN a week of intense turbulence — that may be too mild an expression — certain days and within those days certain developments have been particularly noticeable. The sentiment was already week — the previous Thursday (May18) the Sensex had set a new record when it lost 826 points.

Heightened volatility

Even so, few had anticipated that on Monday there would be such bad news. The fall of 1111 points during the day, necessitating a stoppage of trading following the application of circuit breakers (only for the second time) has attracted widespread attention. The fact that the index recovered somewhat and closed 456 points lower than the previous week was somehow taken to be a positive. Actually such wild intra-day swings indicate heightened volatility, which was once again in evidence on Tuesday .The Sensex gained 341 points to close at 10822. It was premature to proclaim that orderly conditions had returned. For, on Wednesday, the index dropped another 250 points at the end of a day when wide intra-day swings were seen.

On Thursday, after reversing some early sharp declines, the share indices recovered. The Sensex moved up by 93 points to close at 10666 .The Nifty too gained 1.77 per cent (62.15 points) over Wednesday to close at 3177.

On Friday, the last day of the week, the share indices seemed to be on the rebound in the morning but at close the gain in the Sensex was 155 points when it closed at 10821.The Nifty ended the week at 3209, around 32 points higher than Thursday's close.

Given that investors' memory is short, one may think that Friday's upsurge will be the future pattern or the developments during the previous ten days only an aberration.

Yet volatility has not lessened one bit. Investors may easily be at the wrong end of the intra-day swings and lose even on days the markets gained overall.

Equally relevant, for all the talk of recovery, Friday's Sensex closing is still more than 1600 points below the highs it had reached earlier this month.

CRL

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