Search Now

Recommendations

Friday, February 23, 2007

MARKET MOOD


Who let the Bears out?

The bulls have been taken by their horns by the bears as they dominated the proceedings for most part of the week. Out of five trading sessions, the market slipped on four days. It was a 'bears' week out' as they stormed the bourses. The last trading session of the week was disastrous for the bulls as the benchmark BSE Sensex plunged by nearly 400 points and the NSE Nifty tumbled nearly 100 points. Selling was seen across the board with Banking, Consumer Durables and Metal indexes leading the fall. This was the second successive down week for the market. Investors have been gradually booking profits amid high uncertainty about the direction of the market ahead of the budget.

Inflation fell to 6.63% in the week ended Feb 10 from 6.73% a week earlier. However, it was still around its two years high. Historically, we have seen markets touching new peaks in February followed by a decline post-budget. However, things have not been the same this year as concerns about inflation and its fallout on interest rates have overshadowed all other positive news. The Sensex had its biggest weekly fall in seven months. The 30-share BSE index tumbled 5% in the week to closed at to 13,632.53, its biggest weekly decline since the week ended July 21. The Nifty too dived 5% to 3938.95.

Cement majors such as Grasim, ACC and Gujarat Ambuja fell on speculation that the government may take steps to curb prices. There are reports that the government may ban cement exports and introduce curbs to check prices. Grasim plunged by over 14% to Rs2270, ACC declined over 10% to Rs915 and Gujarat Ambuja lost 10% to Rs123.

The BSE IT index fell 5.5% during the week. Index heavy weights led the downfall. Wipro declined over 7% to Rs623, Satyam was down 7% to Rs448 and Infosys lost over 5.5% to Rs2237. Financial Technology shed over 9% to Rs1995. HCL Tech and Patni were the other losers.

Mid-cap stocks also came under the bear onslaught. BEL slipped by over 10% top Rs1556 and TVS lost over 10% to Rs65, while Moser Baer fell by over 10% to Rs274.

Metals managed to escape the sell-off as metal prices on London Metal Exchange (LSE) held firm. SAIL slipped by 1.8% to Rs111 and JSW Steel was down 0.7% to Rs462. However, Tata Steel rose over 4% to Rs460. Jindal Steel was up by 1.3% to Rs122 and Bhushan Steel added 1.7% to 396.

HLL fell over 8% to Rs187 in the week after the company announced its results. Its Q4 net profit came in at Rs5.11bn (down 1.7%), while net sales stood at Rs31.56bn (up 6.11%) missing analysts' estimates. The company's sales declined as short winter cut sales of Pond's and other skin creams. The company also announced it would pay Rs3 a share as final dividend. The scrip hit a weekly high of Rs209 and a low of Rs186.

Indiabulls rose over 4% to Rs438. The company's Board approved a plan to separate the broking business. Merrill Lynch increased its stake in the company to 5.13%. The scrip hit a weekly high of Rs467 and a low of Rs418.

Aban Offshore advanced by over 4.7% to Rs1883 after the company announced it had acquired about 97% stake in Sinvest ASA following the mandatory open offer for the Norwegian company ended on Feb 16. The scrip hit a weekly high of Rs2008 and a low of Rs1797.