Weekly Market Update - May 17 2008

Tracking its Asian peers, the Sensex opened 96 points down on Monday at 16,641 from the previous close of 16,737. The bears came out with renewed vigour taking cues from the weak IIP data and hammered the Sensex down further, to test its day low of 16,546.55 points.

The sharp rise in the US dollar against the rupee attracted investors fancy to technology stocks and the sensex salvaged some gains to finish the day at 16,737.07 with a modest rise of 123 points.

Gradually the bulls gained the upper-hand from Tuesday onwards, and made attractive gains, shrugging of the news of Jaipur blasts.

To wrap-up the week, the Sensex all through stayed firm and absorbed the negative news such as the relentless rise in oil prices, the 7.83 per cent inflation rate and gained nearly 700 points to finish at 17,434.96.

The BSE Mid-cap and smallcap indices fell Monday on concerns of surging inflation, and ever-increasing crude oil prices.

On Monday, the overall markets perceived the rise in oil prices as negative. Cairn Energy bucked the trend and breached its all time high to finish at Rs 305, with a phenomenal increase in volumes.

Shares of MphasiS Ltd, an EDS company, rose 9.88 per cent on Tuesday on reports that Hewlett-Packard is in talks to buy IT outsourcing company Electronic Data Systems Corp for about $13 billion. MphasiS shares gained Rs 21.80 to close at Rs 242.45.

Cement stocks on Wednesday continued their free fall, with the Government exerting pressure on companies to lower prices, thereby squeezing the profit margins.

Local aluminium stocks reacted to higher aluminium prices on the LME. Nalco, which claims to be the lowest cost producer in the world, moved up by over 6 per cent. Hindalco went up by 3 per cent on Wednesday.

Even as IT stocks were doing well, Satyam Computers came under a heavy selling pressure with large volumes on the negative fall-out of the court room battle. The stock was down nearly 5 per cent to finish at Rs 485 on Thursday.

Sugar stocks surged sharply on Thursday owing to the SC ruling allowing sugar mills in Uttar Pradesh to pay farmers Rs 110 per 100 kg for cane. All the major sugar stocks were on a roll.

As the rupee continues to fall against the dollar, textile stocks seemed to have shed the burden of the appreciating rupee and gained favour among investors. Arvind Mills has gone up by 20.19 per cent from a month ago, and other textile stocks have followed the trend.

Steel Authority of India on Friday reported its highest-ever net profit of Rs 7,536.78 in fiscal 2007-08, as sales and prices increased. The scrip was on fire helped by short-covering to gain 7.33 per cent and finish the day at 185.90.