Sensex sheds 507 points

The market was weak, last week, as Sensex declined in four out of the five trading sessions. A whole host of factors right from weak global markets, large IPO’s in pipeline sucking out liquidity, fears of rate hike, and lack of fresh buying weighed on the indices. Volatility was to fore in the entire week.

The benchmark index, BSE Sensex lost 507 points or 3.61% to 14,063.81 in the week ended Friday, 8 June 2007. The S&P CNX Nifty shed 152 points or 3.66% to 4,145 in the week ended 8 June 2007.

The week started on a bearish note with the Sensex declining 74.98 points, to 14,495.77 on Monday, 4 June 2007. A sharp fall in Chinese markets weighed on domestic bourses with shares from auto and IT pivotals attracting heavy selling.

Sensex gained 39.24 points to 14,535.01, a day later, following a strong recovery in markets across the globe, led by rebound in China. Buying was seen in IT, banking stocks and in select pivotals.

On Wednesday, 6 June 2007, Sensex plunged 279.08 points at 14,255.93, as fresh selling emerged at fag end of the day. All the sectoral indices on BSE settled with losses, with shares from PSU, banking and oil & gas space bearing most of the brunt.

Sensex lost 69.75 points to 14,186.18, on Thursday, 7 June 2007, tracking weak global markets. However buying support was seen in IT pivotals.

The correction continued for the third straight day, with the 30-share BSE Sensex losing 122.37 points to 14,063.81 on Friday, 8 June 2007. Weak global markets triggered fall on domestic bourses.

Reliance Industries (RIL) lost ground in the week. The government on Tuesday, 5 June 2007, approved RIL’s Haryana special economic zone, proposed to be spread over 10,000 hectares. Also there are reports that RIL’s KG basin blocks will start gushing out in one year's time. The internal calculations about gas pricing are also complete and reports indicate that RIL is targeting first week of July for the bids to start coming in. The base price for KG gas is likely to be $4.6-4.75/mmbtu.

Shares from the auto pack suffered sharp losses, on weak sales in May 2007 which sparked concerns of slowdown in demand. Tata Motors’ sales declined 4% to 42,558 units May 2007. Pune headquartered Bajaj Auto’s bike sales (including exports) dipped 15% at 1,67,008 units in May 2007 from 1,96,120 units in the same month last year. Hero Honda Motors posted 6% fall in May 2007 sales to 2,85,109 units from 3,03,444 units in May 2006.

However, shares from the IT sector surged on renewed buying as rupee weakened to its lowest in nearly four weeks on Friday, 8 June 2007. Satyam Computers, TCS, Infosys Technologies and Wipro, all settled with gains.

Oil & Natural Gas Corporation (ONGC) slipped on selling pressure. The state-run explorer announced five new finds of oil and gas at its blocks in the east coast and the north east of the country and said it would invest Rs 1285 crore ($316 million) to develop gas fields in western India on 7 June 2007.

Aluminium and copper major Hindalco Industries gained on reports that Alcan may team up with Sterlite Industries to bid for Hindalco.

State Bank of India (SBI), the country’s largest lender, settled lower. It raised about Rs 2500 crore capital through upper tier- II bonds to support the business growth and meet the Basel II capital adequacy norms. This is the largest capital raising ever through upper tier II bonds in domestic market.

On 4 June 2007, Asahi Songwon Colors settled at Rs 89.95, a marginal discount over its IPO price of Rs 90 per share. The scrip listed on BSE at Rs 93 and moved in a range of Rs 87.65 to Rs 134.70. Its IPO was subscribed 1.85 times.

On 5 June 2007, Nitin Fire Protection Industries settled at Rs 484.10 on BSE, a premium of 155% over the IPO price of Rs 190. It debuted at Rs 332.50. Its IPO ended was subscribed 48.04 times.

On Wednesday, 6 June 2007, the European Central Bank (ECB) raised its key interest rate a quarter percentage point to 4% in the eighth increase in 18 months, and the highest reading for five and a half years. It also signalled a further hike could come - perhaps in September 2007- to combat inflation in a dynamic eurozone economy.

On 7 June 2007, the Bank of England left interest rates unchanged at 5.50%, as expected. Despite the verdict, however, interest rates are still expected to rise in coming months.

India's wholesale price index rose 4.85% in the 12 months to 26 May 2007, lower than the previous week's 5.06%, government data released on 8 June 2007 showed.