Markets started the week on an extremely strong note as
both frontline indices surged close to 2 per cent each.
Technology stocks led from the front and ended with impressive
gains while ONGC and select banking stocks provided good
support. The rally was very broad-based and 9 out of 10
Nifty stocks ended higher.
up trend was sustained on Tuesday as banking stocks rallied
ahead on interest rate hike announcements. Select technology
and telecom stocks also ended with very good gains. The
up trend was once again broad-based with gainers far outnumbering
the losers and the indices ended with gains of over a
per cent each.
the last day of December F&O settlement on Thursday,
the indices were subdued but were not as volatile as expected.
The indices closed marginally lower, mostly in account
of losses in Reliance Industries, SBI and select engineering
and capital goods stocks.
Friday, the last day of trading for 2006, the indices
started on a positive note before drifting downwards.
Profit booking in banking stocks and weakness in FMCG
stocks led to a decline in the indices in afternoon trades.
Sensex gained 316 points or 2.35 per cent during the week
and the Nifty added 94 points or 2.43 per cent over the
the year, the Sensex gained 4,389 points or 46.7 per cent
while the Nifty added 1,130 points or nearly 40 per cent.
This is the best annual gains for the frontline indices
since 2003, as both indices extended their winning streak
to the fifth straight year.
the indices saw considerable volatility during the year.
After a sharp drop in May and June, they recovered and
conquered their previous highs later in the year. The
indices survived another bout of volatility this month
to take total 5-year returns on the Sensex to over 10,000
Mid-caps and small-caps did much better than the large
caps for the second the week. After rallying around a
per cent each during the first two days, the mid-caps
sustained the momentum for the rest of the week. Even
on Thursday and Friday when the frontline large caps were
subdued, the smaller stocks continued their up trend.
CNX Mid-Cap 100 index closed the week with gains of 183
points or 3.65 per cent for the week.
economic and regulatory action
deficit for the first half of the current fiscal worsened
to $35.1 billion from $27.1 billion during the same
period of previous year on account of rising oil imports
and a deceleration in export growth. Invisibles like
IT and other service exports and remittances from Indians
working abroad helped rein in the current account deficit
at $11.68 billion as compared to $7.16 billion for the
year ago period.
For the second quarter, current account deficit nearly
doubled to $6.9 billion from $3.6 billion a year ago
despite an $11 billion surplus in invisibles.
Net capital inflows increased to $19.33 billion during
the first half as compared to $13.07 billion for the
previous year period, mostly on account of higher commercial
borrowings and an increase in NRI deposits with domestic
the second quarter of this fiscal year, total external
debt of the country went up to $136.5 billion from $132.2
billion as at the end of first quarter. Of this, long-term
debt contributed $125.9 billion while the balance $10.6
billion was short-term debt. Deposits of NRI's with
domestic banks constituted nearly 27 per cent of total
debt while commercial borrowings formed 24 per cent.
Total government borrowings, including both multi-lateral
and bilateral debt, constituted 26 per cent of total
inflows into the country for the year 2006-07 are expected
to cross $11 billion, a 100 per cent increase over $5.5
billion achieved for the previous year. If re-invested
earnings of foreign companies already operating in India
are also included, total FDI inflows for the current
year are expected to touch $14 billion as against $7.7
billion for last year. Most of these investments are
coming into IT services, manufacturing and financial
launching the railway freight corridor project between
Delhi and Mumbai, the government has become more ambitious.
The next proposal is to build a massive 1,450 km long
industrial corridor along this line, which would run
parallel to the Delhi-Mumbai leg of the Golden Quadrilateral
highway system. The project would cover the states of
Uttar Pradesh, Haryana, Rajasthan, Gujarat and Maharashtra.
The infrastructure package for the corridor includes
new ports and expansion of existing ports, roads to
provide port connectivity, new power projects, etc.
The government of Japan has already pledged its support
for the project and Japanese companies are reportedly
keen to invest in the corridor.
week, the government formally signed the agreements
to set up ultra-mega power projects of 4,000 MW each
in the states of Madhya Pradesh and Gujarat. The one
in Madhya Pradesh, to be set up by Lanco Infratech and
a Singapore-based company, would use coal from captive
mines. The Gujarat project awarded to Tata Power would
use imported coal to fuel the plant. Each of these projects
would see investments of between Rs16,000 crore and
by the response for the first two projects, the power
ministry is now planning seven more such projects.
While two projects would be awarded in 2007, the remaining
would take another year or so to reach agreement stage.
The unique model of these projects has attracted a
lot of attention and should act as a model for all
large infrastructure projects.
government floated shell companies for each of these
projects, which did all the preliminary work and got
all necessary approvals. Bids were invited from interested
private players and the winner was selected on the
basis of lowest final tariff quoted.
The shell companies would now be handed over to the
winning bidders who can finalise the financing and
start implementing the project without the usual initial
hassles associated with such projects. The transparency
in the entire process has helped build the confidence
of private investors and, unlike most such initiatives,
there have been hardly any controversies.
price inflation for the week ended 16 December increased
to 5.43 per cent from 5.32 per cent reported for the
pervious week. The increase was mostly on account of
higher prices of manufactured products even as prices
of primary food articles were marginally lower. Inflation
was at 4.62 per cent during the same week of previous
markets, global economy and oil
markets gained during the week, helped by lower crude
oil prices and signs of resilience in the US economy.
Data released during the week showed improved consumer
confidence while measures of both producer price and
consumer price inflation were lower than expectations.
Dow set new lifetime highs earlier this week but gave
up part of the gains towards the end of the week to
end a per cent higher. The S&P 500 gained 0.5
per cent for the week. Technology stocks also recovered
from last week's fall and the NASDAQ ended 0.6 per
cent higher for the week. US markets would remain
closed till next Wednesday.
has been a very good year for the US markets as all
major indices ended with gains much better than expectations.
For the year, the Dow rallied 16 per cent while the
S&P 500 ended nearly 14 per cent higher. Technology
stocks underperformed and the NASDAQ's annual gains
were limited to 10 per cent.
oil prices continued to decline during the week on forecasts
of warm weather in the US and higher than expected US
fuel inventory. After trying to stabilise during the
earlier part of the week, oil prices declined nearly
2 per cent as the inventory data was released.
a modest recovery on Thursday, oil prices opened weak
and slipped below $60 per barrel on Friday on fresh
forecasts of higher temperatures across US during
the early part of next year. Prices recovered on Friday
afternoon on fears that the imminent execution of
former Iraqi president Saddam Hussein may lead to
fresh violence in the Middle East and affect supplies.
Near month futures on the NYMEX lost $1.26 per barrel
for the week and settled at $61.05 per barrel on Friday.
For the year 2006, crude oil prices were almost unchanged.
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