After the substantial recovery during the previous week, indices were due for a decline this week. Despite the firm trend in other Asian markets, domestic indices lost ground on Monday as automobile and technology stocks came under pressure

By Wednesday, when the market reopened after Tuesday''s holiday, global markets were facing selling pressure. This led to a further fall in the indices as most frontline stocks lost ground. Technology stocks were the worst hit while automobile and select banking stocks slipped further.

Short covering on the last day of F&O settlement supported a recovery in late trading on Thursday. Firm global markets also helped improve the sentiment. Technology stocks led the recovery, as they recouped most of their losses from the previous session. Pharma and FMCG stocks also received good buying support

The up trend continued on Friday, helped once again by firm global markets. Pharma and FMCG stocks continued to lead while technology stocks were mixed. Higher oil prices affected oil marketing and airline stocks.

Sensex gave up 214 points or 1.61 per cent for the week and the Nifty declined 39 points or 1.01 per cent over the week. Both indices had gained over 5 per cent each during the previous week.

Mid-caps and small-caps were also subdued during the week. Traders booked partial profits after the previous week''s decline, but movements in mid-caps and small caps were less volatile this week. CNX Mid-Cap 100 index closed the week with modest losses of 18 points or 0.37 per cent for the week.

Domestic economic and regulatory action

• Wholesale price inflation for the week ended 17 March remained steady at 6.46 per cent. This is the third consecutive week inflation has remained at the same level. Lower prices of select primary food products were offset by higher prices of manufactured goods, including cement. Inflation was at 3.69 per cent during the same week of previous year.

US markets, global economy and oil

• US markets corrected this week after the previous week''s rally as hopes of an early interest rate cut dimmed after the US Fed chairman reiterated that inflation remains the major concern. Persistent worries about further weakness in the housing sector, which could affect more areas of the banking and financial services sectors, also kept the sentiment subdued. Higher oil prices were another dampener.
  
  The Dow lost a per cent for the week while the S&P 500 index gave up 1.1 per cent. NASDAQ ended with losses of 1.1 per cent for the week.
  
  
• Asian Development Bank (ADB) has upped its 2007 GDP growth forecast for Asian economies, excluding Japan, to 7.6 per cent from its earlier estimate of 7.2 per cent. Though exports from the region may slow down this year, higher domestic consumer spending would more than compensate for that. The ADB has forecast an even faster growth rate of 7.7 per cent for the region during 2008. The region had expanded at 8.3 per cent during 2006.
  
  China would continue to drive the region with an estimated growth of 10 per cent this year, while the Indian economy is forecast to grow at an annual rate of 8 per cent. Chinese growth for 2008 is forecast at 9.8 per cent while growth in India is predicted to accelerate to 8.3 per cent during that year.
  
  ADB expects US economic growth to slowdown to 2.5 per cent for the current year, from its earlier forecast of 2.8 per cent. However, it expects US growth to pick up in 2008 and has forecast and annual growth rate of 3 per cent. ADB''s current year growth forecast for the Eurozone has been increased to 2.2 per cent from 1.8 per cent earlier, but 2008 growth for the region may decline modestly to 2.1 per cent. Japanese growth forecast has been lowered to 2 per cent from 2.4 per cent for this year while 2008 growth is expected at 2.3 per cent.
  
  
• Crude oil prices sustained the up trend this week as well as the diplomatic crisis over the capture of British sailors by Iran worsened. Already under heavy international pressure to halt its nuclear programme, Iran continues to maintain a belligerent stance over the issue. If the crisis deteriorates further, there is a real threat of a military conflict which would affect oil supplies. Strike in a major French oil terminal in the Mediterranean and concerns about political tension in Nigeria further fuelled the up trend.
  
  Near month NYMEX futures rallied more than 5 per cent over the week to settle at $65.87 per barrel on Friday.
  

*Disclaimer: The author may have positions in the stocks mentioned above at the time of writing this article. This analysis/report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.