Indices break out of the range after 2 weeks of consolidation

The markets opened the week in spectacular fashion, helped by the better than expected quarterly numbers from TCS declared over the last weekend. Despite the weakness in super heavyweights ONGC and Reliance, the frontline indices closed the day with gains of over a per cent each.

Markets tried to consolidate for the next two days, with the indices moving within narrow ranges. Thursday saw the indices cracking in afternoon trades as there was not much buying support. This was the only day of the week when the indices closed with losses.

The markets closed the week with a huge rally on Friday. The Sensex posted its first 100 point gain in a single day for the first time since February. The strong closing helped the main indices to close the week with gains of over a per cent each.

The rally on Friday followed the revaluation of Chinese yuan on Thursday. This led to a decline in the US dollar which traders hope would attract more FII investments into India. The prospect of a further upward revision of Yuan against the dollar later in the year led to broad based buying in frontline stocks.

Mid-caps outperformed the frontline stocks by a handsome margin for the week. A new benchmark index, CNX Mid-Cap 100, was introduced for mid-caps during the week. The new index closed the first week of its life with a 4 per cent gain.

There are reports that many large domestic mutual funds have decided to suspend fresh subscriptions to their mid-cap focussed growth funds from August. These fund houses believe that most of the smaller stocks are over-valued and need to correct before they can look at fresh investments.