Indices close the week at all time highs despite the Mumbai deluge

Markets continued their one way move upwards with barely a pause showing scant regard to the rain caused disruptions in Mumbai. Even the trading holiday on Thursday after banking operations came to a halt in Mumbai, could not upset the indices much.

Banks led the way throughout the week even as more cautious market watchers termed the surge in stock prices as crazy. Robust FII inflows and massive short covering ahead of the monthly derivatives settlement saw the indices seeking new life time highs on most of the days.

The fire in one of the production facilities of ONGC and losses reported by 2 of oil marketing companies did not dampen the market momentum. Lower than expected first quarter results from frontline steel companies like Tata Steel and SAIL also could not rein in the market surge, though these stocks corrected during the week.

The Sensex crossed the 7600 mark comfortably during the week and touched 7700 on Friday before selective selling forced the index to close below that mark. Gains on the Nifty were lower as weakness in ONGC and the sideways movement in some of the technology majors held its gains.

Mid-caps underperformed the frontline stocks throughout the week as many momentum stocks saw deep correction. Poor first quarter numbers from some of these companies added to the pain in smaller caps. The CNX Mid-Cap 100 index closed the week on a weak note on Friday.

Domestic economic and regulatory action

  • The quarterly review of the RBI's annual credit policy left all benchmark rates unchanged. The central bank may have been encouraged by the stable price levels despite the modest hike in fuel prices effected in June. Besides, the policy makers definitely do not want to derail the recovery in manufacturing growth by reining in credit growth.