Stocks fail to retain gains
THE MUCH awaited correction was witnessed on bourses last week and profit booking, which emerged on Thursday and Friday, dragged down the Sensex snapping a four-week gaining streak. Soaring crude oil prices along with weak overseas advices also weighed on share values. Technology and refinery shares bore the brunt of large-scale offloading by domestic funds and operators. Share values moved both ways in alternate bouts of buying and selling.
Notwithstanding a smart rise in metal, bank and pharma shares, the Sensex landed in negative territory with a sharp net fall of 33.40 points to close at 5527.75. However, sentiment remains positive for a fresh turnaround.
Earlier, during the week, the Sensex staged a smart rally and touched a four month high above the 5600 level. Trading resumed on a strong note amidst reports of continuous inflow of funds on behalf of foreign institutional investors and increased buying from operators in select heavyweight counters. Bulls were in total command during the early part of the week and the bourses witnessed keen participation from institutional and retail investors. However, technical correction emerged on Thursday as operators, taking advantage of reports of sudden hardness in crude oil prices due to supply restraints, resorted to brisk selling.
Heavyweight counters such as Reliance, Grasim, Hero Honda, Hindustan Lever, HPCL, Infosys, ITC, BHEL, ONGC, Satyam Computer and Wipro suffered a sharp setback on heavy profit-booking ahead of the end of September contract on Thursday.
However, other index-based stocks such as Hindalco, ICICI Bank, Maruti Udyog, Bajaj Auto, Cipla, Ranbaxy, Tata Motors, Tata Power and Tisco witnessed a smart rally. There was also evidence that operators and retail investors shifted their attention to second-line stocks most of which finished with smart gains.
The BSE-30 share sensitive index opened at 5566.53 against the previous weekend's close of 5561.15 and moved erratically in a range between 5638.79 and 5513.68 before ending the week at 5527.75, a fall of 0.60 per cent.
Among auto stocks, Tata Motors witnessed some buying interest ahead of its listing on the New York Stock Exchange on September 27 and on reports that the company may buy a Spanish bus design firm. Maruti Udyog, which turned bearish at initial stages, recovered partly following the `amicable' settlement reached by the Government and Suzuki Motor Corporation. Oil counters such as BPCL, HPCL, ONGC, Reliance, Hind Oil Exploration and IOC met with marginal setback on Thursday.
Among stocks specific, IDBI and IDBI Bank remained fairly active during the week following the Government decision to merge the former with the latter. Other bank counters also remained active, but selling pressure during the last two days almost wiped out initial gains.
Steel counters showed a firm trend. Tata Steel, Ispat, Jindal Vijaynagar Steel, SAIL and Essar Steel remained firm on various grounds, including expectation that the companies would be able to maintain the growth rate of that was announced in the first quarter.
During the week, stocks of three companies were listed on the bourses. While Indiabulls Financial Services and Crew B.O.S Products opened at levels higher than their issue prices, Sah Petroleums opened at issue price.
As the September series in the derivatives segment will expire next Thursday, the market could see some volatility next week.
Rupee weakens
Despite positive sentiments on the back of rising trade and foreign fund inflows, the Indian currency weakened against the U.S. currency due to persistent dollar demand from oil corporates and importers, fuelled by surging global oil prices.
In moderately active but directionless trade during the week, the rupee ended at 45.90/91 a dollar, a three paise decline from the previous weekend closing level of 45.87/88 after hitting a early low of 45.96/97. It, however, climbed to a ten-week closing high of 45.8350/8450 on Tuesday, driven by healthy trade and foreign fund inflows.
Interest rates lower
Interest rates ended marginally lower as compared to the previous week. The ten-year government security was traded at 6.03 per cent and the five year security at 5.81 per cent. The year-on-year inflation moved up to 7.87 per cent for the week ended September 11.
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