MARKET MOOD

Market breaks winning streak

I tried so hard, and got so far
But in the end, it doesn't even matter
I had to fall, to lose it all
But in the end, it doesn't even matter

Last week we mentioned about the pace at which the market could fall, and how difficult it would be for traders to survive in a volatile market. Huge intra-day gyrations made it difficult for the bulls to stand tall. The CRR hike, added salt to the wounds of the battered bulls. In a surprising move RBI increased the Cash Reserve Ratio by 50bps effective in two stages from 17th February and 3rd March 2007 on concerns of rising inflation and sustained high credit growth. Banking and real estate sectors were the biggest losers following this move.

Despite resurgence of the bulls on D-street from deep abyss in last two trading sessions, the key indices eventually managed to close lower on week on week basis, snapping its seven-week winning streak. The bulls gave there all in an effort to recoup the losses, but in the end it wasn't enough as selling was seen in counters like Banking, Real Estate, Auto, Capital Good and Metal stocks. Even the Mid-Cap stocks felt the burnt of the investors losing by nearly 1%. Finally, BSE Sensex closed 183 points lower or 1.26% after touching a weekly low of 13805.36 and a high of 14529.28 before settling at 14356 and NSE Nifty lost 41 points or 0.98% to close at 4146.

Hindalco, Maruti, SBI and Ranbaxy were the major losers among the 30 Sensex scrips. While, IT stocks outperformed the key indices and stood firm in volatile market. Wipro, Bharti Airtel, ONGC and Reliance Industries were the major gainers within the Sensex. Concerns of hardening interest rates played spoilsport over the week after impressive economic growth, prompted RBI to unexpectedly increase the amount of cash lenders must keep aside to cover deposits to curb loans growth and inflation

Real Estate stocks continued its downward journey after a hike in CRR by RBI, as the move could form the much awaited trigger for drop in real estate prices, which have held on despite rising interest rates (small correction in some parts). Property prices appear to have reached their peak, according to some analysts. Concerns that loans will become more costlier proved to be an important factor behind the fall in stock prices of Real Estate stocks. Unitech fell by over 16% to Rs392, Parsvnath Developers was down 5.3% to Rs321, Akruti Nirman dropped by over 18% to Rs452 and Bombay Dyeing declined over 5% to Rs608.

Worries over rising interest rates also pulled down the auto stocks. However, much of them rebounded from a week's low after Government lowered the prices of auto fuels by as much as 4.5% on Thursday afternoon. Maruti declined by over 7% to Rs892 after hitting a low of Rs839 over the week. Tata Motors was down 2.8% to Rs869, TVS Motors slipped 4% to Rs72 and M&M fell by 1.8% to Rs901. Hero Honda bucked the negative trend and gained by over 2% to close at Rs743.

Heavy selling was seen across the Capital Good stocks. Index heavy weight BHEL slipped 5% to Rs2386 and Punj Lloyd fell by over 8.6% to Rs971. L&T slipped by 3.4% to Rs1692 and Siemens declined 2.3% to Rs1162.

IT stocks were in momentum following appreciation of Dollar against the Rupee. Major Tech firms income is in the US market in terms of US$, contributing towards the profitability of the company. US accounts for about 6% of sales of Indian software exporters. Wipro topped the charts by gaining 6.4% to Rs676, the scrip was the top gainer among the 50-scrip's of NSE Nifty and IT bellwether Infosys was up by 0.3% to Rs2374. Among the Mid-Cap stocks, Financial Technologies zoomed by over 11% to Rs2199, Mphasis BFL advanced 4.4% to Rs306 and HCL Tech added 2.1% to Rs676.

Oil & Gas exploration stocks were in limelight led by gains in ONGC after the company signed an accord with Eni SpA to swap an oil area in the country for a location in Africa's Congo Basin to get deepwater exploration technology from the Italian company. ONGC advanced 1.3% to Rs905 and Reliance Industries gained 0.9% to Rs1406. However, oil marketing stocks took a beating on Thursday after the Government cut the fuel prices in an effort to curb the inflation. IOC fell nearly by 8% to Rs427, BPCL lost over 4.5% to Rs328 and HPCL slipped 4.8% to Rs276 over the week.

Hindalco, India's biggest aluminum manufacturer, fell by over 12% in the week the most in at least 16 years after the company announced that it would buy Atlanta based Novelis Inc for more than $3.4bn. The stock fell sharply owing to worries about the high debt component of the transaction. The scrip hit the weeks high of Rs151.9 and a low of Rs138.15.