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| Weekly closing: Markets have a disastrous time |
| SI Reporter / Mumbai Feb 05, 2011, 11:17 IST |
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The markets went into a tailspin amid a volatile trading week as the Egypt crisis, unbriddled inflation and ongoing technical weakness sent the participants scurrying for cover. The Sensex oscillated in a broad range of 796 points, between a high of 18,723 and a low of 17,927, barely managing to hold on to the 18k mark at 18,008, down 387 points, and the Nifty fell below the crucial psychological level of 5,400 to settle with a loss of 116 points at 5396. In the process, the BSE and NSE benchmarks not only ended at 5-and 6-month lows respectively, but also emerged as the worst global performers this year after Egypt.
The market correction is now five months old; the Sensex has in fact slumped 14% from the highs recorded on November 5 and the downtrend just got confirmed as the Sensex broke the 200-DMA last week. The Egyptian imbroglio only added to the jitters on Dalal Street. Egypt has been on a boil since the past 10 days as protestors have taken to the streets demanding an end to the 30-year autocratic, pro-US regime of President Hosni Mubarak and seeking more employment opportunities. The upheaval has been inspired by the succesful overthrow of the corrupt regime in neighbouring Tunisia last month. And food inflation jumped to 17.05% for the week ended 22 January 2011, its highest level since 25 December 2010, compared to 15.57% in the previous week. The fuel price index climbed 11.61%, higher that previous week's rise of 10.87%, and the primary articles index rose to 18.44% from previous week's 17.26%.
 And Finance Minister Pranab Mukherjee sought to assure the investors that a growth of 8.5% was on track for the current financial year ending March 2011. Manufacturing activity is on a strong growth path in spite of the monthly fluctuations in the Index of Industrial Production witnessed in recent months and the fiscal deficit will be lower than the government's earlier projection of 5.5% for this year, Mukherjee added. He also assured the country that the government will manage a way out of the spiralling global oil prices.
The next major trigger is the Union Budget. It would be a tight-rope walk for Pranab Mukherjee as he seeks to maintain the growth momentum and fight inflation, while retaining the focus on the government's flagship social sector initiatives and not losing sight of the assembly elections in politically crucial states such as Kerala and Tamil Nadu scheduled later in the year. The Finance Minister may also announce a new roadmap for the Goods & Services Tax (GST), which is still to see the light of the day in the absence of a political consensus.
On the global front, most Asian markets were shut through the week on account of the Chinese Lunar New Year holidays.
Among the index stocks, ITC plunged over 9% to Rs 153, while Reliance Communications, NTPC, Hero Honda, HDFC, Tata Power, Reliance Infrastructure, Jaiprakash Associates, Mahindra & Mahindra, Maruti, Jindal Steel and Infosys declined 4-8% each. On the other hand, DLF and Hindalco rallied over 6% each to Rs 237 and Rs 237 respectively, and ONGC surged 4.8%.
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