Sensex loses 455 points

The week was extremely volatile and the Sensex traded below the psychologically-important 13,000 mark for most days in the week ended 16 March 2007. The market declined despite the Sensex gaining in three out of the five trading sessions for the week ended 16 March 2007. A global market meltdown, due to a deepening US mortgage lending crisis, coupled with higher inflation data pushed the market lower.

The BSE Sensex shed 454.59 points for the week ended 16 March 2007, to settle at 12,430.40, compared with the previous week’s closing of 12,884.99 on 9 February 2007. The S&P CNX Nifty lost 109.45 points, to settle at 3,608.55, compared with the previous week’s closing of 3,718.

The BSE Mid-Cap Index rose 7.13 points for the week ended 16 March 2007, to settle at 5,235.57. The BSE Small-Cap Index rose 23.59 points, to 6,274.64.

The market edged higher on Monday (12 February 2007), tracking firm Asian markets. The 30-share BSE Sensex gained 17.64 points (0.14%), to settle at 12,902.63. The market had surged in the early-afternoon, and the benchmark Sensex jumped as many as 171.87 points, to 13,056.86 at 13:05 IST.

On Tuesday (13 March 2007), the barometer Sensex settled with gains, as buying resumed in the late afternoon session, with IT, metals and select pivotals leading the charge. Real estate stocks rebounded after a severe pounding, which had eroded 25 - 50% value in such stocks. The 30-share BSE Sensex settled 80.35 points (0.62%) higher, at 12,982.98.

On Wednesday (14 March 2007), a fresh setback put paid to the recovery on the domestic bourses that had just started coming into their own, drawing inspiration from the promise showed by global bourses. The trigger for Wednesday’s fall was a setback on bourses around the globe due to a deepening US mortgage lending crisis. The 30-share BSE Sensex plunged 453.36 points (3.4%), to settle at 12,529.62 on that day. It was the Sensex's biggest daily point fall since 5 March 2007.

On Thursday (15 March 2007), the Sensex experienced a trend reversal during the day. The benchmark index, which after opening higher at 12,655.94, had surged to 12,789.81, eased as selling began in full swing. Offloading continued till the barometer index touched a low of 12,510.75, a fluctuation of 279.06 points. Volatility was the trademark of Thursday's session, which experts opine the domestic market will suffer through March 2007. According to them, healthy corporate results in April should usher in some stability. The 30-share BSE Sensex settled 14.23 points higher, at 12,543.85 on that day.

On Friday (16 March 2007), The market edged lower. However, it ended above the lower level due to recovery by index heavyweight Reliance Industries and some IT pivotals. Telecom, cement and banking shares edged lower. The Sensex closed at 12,430.40, a fall of 113.45 points for the day. The Sensex had tumbled 227.75, to 12,316.10, at 14:49 IST, when the market was hit by data showing a surge in inflation, reigniting worries of interest rates rising further. Caution on the global bourses, ahead of key US inflation data, also weighed on the sentiment.

Till 19 March 2007, trading on the bourses will be halted for 45 minutes at 11:45 IST due to sun outage. Trading will then resume at 12:30 IST, and will continue up to 16:15 IST.

Ranbaxy was down 3.07% for the week ended 16 March 2007 to Rs 316.05. The stock came under pressure as market men continued to fret over possible equity dilution if Ranbaxy acquired Merck's generic drugs business. The stock has declined even as the company had dismissed media reports that it was planning an issue of shares in the US, or dilution in stake by founders to fund the acquisition. This week, Ranbaxy put in its bid for Merck's generics business.

Reliance Industries (RIL) ended 1.42% lower for the week, at Rs 1299.80. As per reports, RIL had made two more gas discoveries off the country's east coast. The discoveries were made in gas-rich KG DG block in the Krishna-Godavari basin, and in NEC 25 block of the Mahanadi basin.

IPCL dropped 3.43% to Rs 259.40. Reliance Industries (RIL) set a ratio of one share of RIL for every five held in IPCL, to give shape to the merger of IPCL with RIL.

State-run Oil and Natural Gas Corporation rose 2.41% to Rs 762.20 on reports it was seeking 49% stake in Venezuela's San Cristobal oil block.

IT bellwether Infosys shed 3.59% to Rs 2047.25, whereas TCS rose 1.97% to Rs 1236.10. Wipro gained 0.23% to Rs 565.90.

ICICI Bank lost 5.69% to Rs 810.65. ICICI Bank has no plans for a stock-split, Chief Executive Officer KV Kamath said on Monday responding to market speculation.

Bajaj Auto rose 0.05% to Rs 2488, Maruti Udyog was down 1.04% to Rs 779.40. The government has initiated the process of divesting its residual 10.27% stake in (MUL).

ITC lost almost 6.06% to Rs 145, extending its recent fall, on concern that the government may bring cigarettes under the Value Added Tax (VAT) net.

Pharma major Dr Reddy’s Labs gained 3.39% to Rs 682.10. The company has pulled out of the race to acquire the generic drugs unit of Merck.

Two IPOs debuted this week. Raj Television Network debuted at Rs 275 on BSE on 16 March 2007 compared to the IPO price of Rs 257. It settled at Rs 225.95 on the day of its debut.

The second IPO was Page Industries, which debuted at Rs 341.90 on the BSE on 16 March 2007 compared with the IPO price of Rs 360. It settled at Rs 282.10 on the day of its debut.

The wholesale price index rose 6.46% in the 12 months to 3 March 2007, up from the previous week's annual increase of 6.10% due to higher edible oil and naphtha prices, data showed on Friday. The figure was higher than an expected 6.31%.

Finance Minister P Chidambaram said on Friday, the government had asked the central bank to take monetary steps necessary to maintain price stability. "When I met with the central board of the RBI recently I pointed out ... and urged the RBI to continue to be vigilant and take such measures as are necessary to maintain price stability," Chidambaram told the Lok Sabha.

The Lok Sabha on Friday passed the Banking Regulation (Amendment) Bill, 2007. The Banking Regulation (Amendment) Bill is aimed at allowing more operational flexibility to the Reserve Bank of India in the conduct of monetary policy. The bill seeks to amend Section 24 of the Banking Regulation Act, 1949 to enable the RBI to specify the statutory liquidity ratio without any floor rate. At present banks are required to invest a minimum of 25% of their deposits in government securities, as dictated by the statutory liquidity ratio (SLR).

FIIs were net sellers to the tune of Rs 722.60 crore during the first four days of the week ended 16 March 2007. Mutual funds (MFs) were net sellers of equities for the week ended 16 March 2207. They sold shares worth Rs 327.46 crore during the period under consideration.