The soaring crude oil prices, high inflation and sustained selling by foreign institutional investors (FIIs) pulled the market down to its lowest level in calendar year 2008. Political concerns over the nuclear deal with US also weighed on the market sentiment. Sensex declined during 3 out of 5 trading sessions.
The BSE Mid-Cap index declined 195.74 points or 3.14 pc to 6,032.43. The BSE Small-Cap index slumped 184.06 points or 2.43 pc to 7,397.66.
Interest rate sensitive sectors bore major brunt of selling. BSE Bankex was down 3.56 pc to 6,804.78, BSE Auto index came down 2.1 pc to 4,042.86 and BSE Realty index declined 5.05 pc to 5,383.81 edged lower in the week.
Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar. In June 2008, FIIs dumped shares worth Rs 7,477.80 crore till June 19 2008. FII outflow in calendar year 2008 totaled Rs 22,847.20 crore during the same period. On the other hand, mutual funds were net buyers of shares to the tune of Rs 1,820.20 crore in the month of June 2008, till 19 June 2008.
The first two sessions of the week saw the Sensex closing at 15,696.90 on Tuesday. Bulls had an upper hand over bears with market sentiment boosted by reports of higher advance tax payment by top Indian firms in the first installment of 15 June 2008, reports of good monsoon in the initial phase and easing of oil prices from record high.
However the decline commenced from Wednesday when it lost 274.59 points or 1.75 per cent at 15,422.31. The trend continued for the subsequent two days also as the market succumbed to selling pressure due to political concerns, besides weak Asian markets.
Banking, realty and capital goods stocks were hurt the most. All the sectoral indices on BSE ended in red. On Friday the announcement of high inflation latest in 13 years saw the market going down rapidly to shed 516.70 points and end the week at 14,571.29. The two key indices, Sensex and Nifty hit their lowest level of calendar year 2008 on that day.
India's largest aluminium producer by sales Hindalco Industries declined 8.21 pc to Rs 161 in the week . Its board on yesterday approved a Rs 5000 crore rights issue of 1:3 to redeem a bridge loan it had taken for acquisition of Novelis in May last year for a consideration of six billion USD.
India's biggest engineering and construction firm in terms of revenue Larsen &Toubro rose 0.8 pc to Rs 2637.80 The company on 20 June 2008 said its heavy engineering division had crossed Rs 1000 crore of order booking for supply of high tech equipment and systems in the first two months of the current financial year.
India's second largest telecom services provider by sales Reliance Communications plunged 9.58 pc to Rs 491.30 in the week. In another family feud between Ambani brothers, Mukesh Ambani controlled Reliance Industries claimed a right of first refusal to buy a controlling stake in Reliance Communications. Meanwhile, Reliance Communications (RCom) said, in a mall fide effort to disrupt the talks, Reliance Industries (RIL) has sent a communication to MTN, making a false claim of an alleged right of first refusal to buy a controlling stake in RCom.
Reliance Communications (RCom) also threatened to claim damages from Reliance Industries, in case the latter chooses to take legal action against RCom. It added that RIL's claim is legally and factually untenable, baseless, and misconceived. Earlier on 26 May 2008, Reliance Communications (RCom) had informed the bourses that it has entered into exclusive negotiations with MTN Group for 45 days soon after the South African giant aborted its talks with the Sunil Mittal-controlled Bharti group. As part of a tie-up, Anil Ambani would likely swap his controlling stake in Reliance Communications to become the largest shareholder in MTN.
World's sixth largest steel producer Tata Steel declined 7.58 pc to Rs 777.60. The company said it has formed a joint venture with Jasper Industries to set up a 135 megawatt power plant in Orissa.
Tata Steel along with its wholly owned subsidiary Rawmet Ferrous Industries will hold 26 pc in the project and Japser Industries will hold the remaining 74 pc.
India's largest commercial bank, State Bank of India declined 6.52 pc to Rs 1,247.50. The country's largest lender, on Saturday, 14 June 2008, decided not to raise its prime-lending rate. The decision was taken at a meeting of the assets-liability committee (Alco) of the bank India's largest tractor maker by sales Mahindra&Mahindra gained 0.84 pc to Rs 575.20. The Union government raised excise duty on large cars, multi-utility vehicles and sports utility vehicles with an engine cubic capacity exceeding 1500. As per reports, the additional excise duty will be applicable on Mahindra&Mahindra's Renault-Logan, Mahindra Scorpio and Bolero, Maruti Suzuki India's Maruti SX4, and Tata Motor's Tata Safari, Tata Sumo India's largest car maker by sales Maruti Suzuki India gained 0.82 pc to Rs 727.80 in the week.
ICICI Bank was down 3.94 pc to Rs 734.65, Infosys came down 1.93 pc to Rs 1,827.60, followed by Satyam Computer Services by 5.37 pc to Rs 455.05, Tata Consultancy Services by 4.88 pc to Rs 863.40, HDFC Bank by 2.17 pc to Rs 1,099, Reliance Industries by 7.57 pc to Rs 2,096.60 edged lower in the week.
The infrastructure sector output rose 3.6 pc in April 2008 from a year earlier, much lower than an unrevised 9.6 pc growth in March 2008, government data showed on Wednesday, 18 June 2008. The infrastructure sector accounts for 26.68 pc of industrial output.
The direct tax collections recorded strong growth in the first two months of this fiscal. As per the Finance Ministry data, direct tax collections jumped 71.28 pc to Rs.22,840 crore in April-May 2008 over April-May 2007. The growth in personal income tax was 73.05 pc at Rs 14,690 crore in April-May 2008 over April-May 2007. Corporate tax collection rose 68 per cent to Rs 8126 crore in April-May 2008 over April-May 2007.