Global weakness pulls down the indices from record highs during the week

The markets started the week as if the Sensex was in a hurry to cross the 9000 mark ahead of the results season starting next week. The indices continued their firm rally from the previous week and raced to new lifetime highs as liquidity flows remained robust.

The Sensex scaled the 8700 mark on Monday and went on to close at 8800 on Tuesday. Nifty crossed the 2650 mark on Tuesday and posted an all time closing high of 2663. Monday's rally was fuelled by auto stocks which rallied on the back of good sales numbers for the month of September. Technology stocks took over the lead on Tuesday as expectations about good results led to buying.

Wednesday saw correction set in as global markets started weakening. Thursday turned out to be day of sharp decline as most Asian markets, led by Japan, came crashing down. The indices lost well over 2 per cent each on that day as heavyweights came down sharply.

Friday turned out to be the most volatile session in recent weeks as the markets were undecided about the direction. Global cues were mixed as some Asian markets recovered on Friday while the US remained weak during the previous day. The indices regained part of the intra-day losses, but closed the week on a weak note.

The Sensex lost 144 points or over one-and-a-half per cent during the week and the Nifty shed 27 points or three-quarters of a per cent over the week.

Mid-caps also rallied strongly on Monday and Tuesday, before losing all the gains during the last three days of the week. The momentum seen in prominent mid-cap stocks during last month almost returned early in the weak. That did not last as some of these stocks fizzled out later though select stocks continued to run up fast on trader interest. The mid-caps performed much better than the frontline indices during the week. The CNX Mid-Cap 100 index lost only 1 point during the week.

Domestic economic and regulatory action

  • The government has finally called off the BHEL disinvestment programme on the face of continuing opposition from the left parties. The Left parties were boycotting the coordination committee meetings of the ruling coalition to protest against the disinvestment programme. The UPA chairperson is believed to have formally informed the Left parties about the decision.

  • That leaves only the Maruti disinvestment for this financial year. The government is planning to offload part of its 18-per cent stake in the company before the end of the current financial year.

  • Wholesale price inflation for the week ended 24 September increased to 3.97 per cent from 3.75 per cent for the previous week. The rise in inflation was attributed to higher prices of fuel and manufactured products. Consensus estimate of inflation was marginally over 4 per cent for the week.