Weekly Wrap-up: Sensex tanks 868 points in the week

The market plunged into the negative for the first time in 3 weeks after some highly volatile sessions of trading. As the US subprime lending problems continued to swell, Asian markets reacted accordingly and big bouts of profit booking were seen in the pivotal stocks at the BSE and NSE. Also, December, historically not being a very good month for the markets, traders chose to book profits and cut down their long positions before entering into the fresh week.

The 30-share BSE Sensex declined 868.26 points to 19,162.57 in the week ended Dec. 21 2007 while the 50-share NSE Nifty slipped 281.70 points to 5,766.50 in the week.

On Monday (December 17), the Sensex opened weak at 20,032.67 on back of negative global cues. It continued to trade weak throughout the day due to heavy selling pressure in pivotal stocks. Intense profit booking was witnessed across board. The Sensex fell to an intraday low of 19,177.19, its second biggest single day fall.

The Sensex ended down 769.48 points, or 3.84%, at 19,261.35, while the broad-based NSE Nifty closed at 5,777.00, down 270.7 points, or 4.48%. It was the biggest single day fall for the Nifty.

On Tuesday (December 18), the market opened on a quiet note. It continued to trade in the positive for sometime and after touching an intraday high of 19,375.07, slipped into the negative terrain on weak cues from global counterparts. The benchmark, Sensex continued to trade in a volatile manner initially; however in the last lap of trade the market witnessed huge fall on back of strong selling pressure across the board. The market lost around 252 points to touch the day`s low of 19,009.35 but made some recovery in the last minutes of trade.

BSE Sensex declined 181.71 points, or 0.94%, to close at 19,079.64, while the broad-based NSE Nifty closed at 5,742.30.00, down 34.7 points, or 0.60%.

On Wednesday (December 19), the 30-share index, opened on a strong note. The opening was backed by positive global cues with most of the Asian markets opening in the positive. Within moments of the opening bell, the Sensex proceeded to a 300 points gain. Until mid day the index seemed to be in a consolidation mood. However, in the later half of the day the index slipped into the negative backed by heavy selling interest in the pivotal stocks. The index came off 453 points from its day`s high. The last hour saw some relief rally, the index managed to regain some ground and ended the day on a flat note.

The BSE Sensex ended at 19,091.96, up 12.23 points while the NSE Nifty closed at 5,751.15, up 7.85 points.

On Thursday (December 20), the Sensex opened on a strong note with a positive gap of 109 points from the previous close of 19,091.96. BSE Benchmark Index continued to trade in positive terrain and soon after opening it touched intraday high of 19,291.14 (up nearly 200 points) due to the strong buying in all the sectors especially in IT, Auto and Metal space. However Sensex was not able to maintain the same level and in the following sessions it traded in a range bound manner and finally ended with a gain of 70.61 points.

BSE Sensex gained 70.61 points, or 0.37%, to close at 19,162.57, while the broad-based NSE Nifty closed at 5,766.00, up 15.35 points, or 0.27%.

On Friday (December 21), the market remained closed on account of Bakrra Eid.

Companies In News

Reliance Communications (RCom) completed the Rs 12 billion-worth acquisition of US-based Yipes Holdings. The acquisition will give the company access to Rs 4,000 billion global enterprise data market. RCom received all necessary approvals from the US Federal Communications Commission (FCC) for the transfer of control of Yipes.

The board of directors of Deccan Aviation, which met on Dec. 19, 2007, decided to merge the scheduled airline business undertaking of Kingfisher Airlines with itself. The merged entity will be known as Kingfisher Airlines. Vijay Mallya will be the chairman and CEO, while Captain Gopinath will be the vice-chairman of the merged entity. The charter business of the company will be spun off into a separate entity to be jointly owned by Captain Gopinath and the UB Group.

Welspun India, a part of the USD 1.5 billion Welspun Group and amongst the top 4 terry towel manufacturing companies in the world, has acquired 76% interest in bath rug major in Portugal, Sorema - Tapates e Cortinas de Banho, SA (Sorema) for Rs 456 million.

The Tata Group will be soon declared as the winner of Ford`s, Jaguar and Land Rover brands. However, a final decision may come in the first week of the New Year, as per international media reports. It is said that the deal is valued at USD 2.05 billion. Mahindra & Mahindra and private equity firms One Equity Partners were the other bidders for the two luxury brands.

Bharat Heavy Electricals (BHEL) inked a joint venture agreement with NTPC on Dec. 17, 2007 for establishment and operation of joint venture company for taking up engineering, procurement & construction (EPC) business.

Sector Round-up

Four GSM mobile operators, Bharti Airtel, Vodafone, Idea and Spice will approach the Delhi High Court against the Telecom tribunal TDSAT`s interim order not to stay the spectrum allocation process. GSM lobby Cellular Operators Association of India (COAI) said in a statement, that the department of telecom`s (DoT) decision is an attempt to pass off second and new GSM licences to CDMA operators in the garb of dual technology allocation.

The centre, on Thursday (December 20) said that it would look into cartelisation of the cement industry after the anti-monopoly watchdog MRTPC pronouncing 44 manufacturers guilty of unfair trade practices. MRTPC held cement manufacturers including L&T Cement, Birla Cement, Grasim and ACC guilty of cartelisation under the aegis of Cement Manufacturers` Association. The Commission said that they had found direct as well as indirect evidence of concert.

Economic Developments

The National Development Council (NDC) approved the 11th Five-Year Plan that aims at sustaining a 9% economic growth. The five-year plan (2007-12) was approved by the NDC, the highest policy making body comprising the centre and the states, amid demands by the chief ministers for greater flow of funds to states for tackling the regional imbalances. Prime minister Manmohan Singh cautioned against the price pressures on food items and the adverse impact of global financial crisis on the economy. Attaching highest priority to agriculture, education and health, the Plan earmarks more than half of the budgetary support toward these areas. The total outlay for the plan is Rs 36,447.18 billion, of which budgetary support would be Rs 14,217.11 billion.

India`s wholesale price index (WPI) based Inflation moved to 3.65% for the week ended December 08, as against 3.75% in the previous week. Lower prices of food articles like fruits and vegetables, pulses and some manufactured items led the inflation to slowdown. The annual rate of inflation stood at 5.63% as on Dec. 09, 2006.

New Listing

Shares of leading FMCG player, Jyothy Laboratories after listing on bourses, settled with 13.04% premium on the NSE. The shares opened at a premium of Rs 205, or 29.71%, at Rs 895 as compared with the issue price of Rs 690 a share. It touched a high of Rs 895 and a low of Rs 741.15. It finally closed with a premium of Rs 90, or 13.04% at Rs 780. Total volume of shares traded was 5,136,540, while the total turnover was Rs 4,061.62 million.

The week ahead

Giving his outlook for the coming week, technical analyst Vishwas Agarwal said, ``If Sensex maintains 18,888, then the market looks good and in trading zone; above 19,350 more profitable trading is possible with a possible target of 19,888.``

He added, ``The course of the market will be decided by RIL and SBI, so its very important to watch these two stocks...January is a result session which will help in deciding the market move. Also the Gujarat election result is due which will also give some direction to the market. We can see some upside of 10-15% in the Gujarat based stocks if BJP wins this election.``