Review: Sensex bounces back by 381 points

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Mumbai, Aug 2: The 30-share Bombay Stock Exchange (BSE) Sensex recovered by 381.75 points, or 2.67 per cent, to 14,656.69 in the week ended from the previous weekend's level. Similarly, the CNX S &P Nifty index of National Stock Exchange (NSE) also rose by 101.7 points, or 2.35 pc, to 4,413.55 during the same period. The key factors that revitalized the investors' confidence during the week were firm global markets and further decline in oil prices.

On August one, the market opened weak on subdued global cues and completely changed the course, ending near day's high. The rally gathered steam in late trade after United Nations nuclear watchdog chief Mohamed ElBaradei said a basic inspection plan for India met all safeguards standards. Members of IAEA's Board of Governors would vote on the India-specific nuclear safeguard agreement, a key step in operationalisation of Indo-US nuclear deal.

The 30 share BSE Sensex surged 300.94 points, or 2.10 pc, at 14,656.69. The broader-based S &P CNX Nifty rose 80.6 points, or 1.86 pc, at 4,413.55.

On July 31, the key benchmark indices extended previous session's sharp gains ending marginally higher amidst volatility as futures and options contracts for July 2008 series expired on that day. The Sensex rose 68.54 points, or 0.48 pc, at 14,355.75. The Nifty was up 19.40 points, or 0.45 pc, to 4,332.95.

In a sudden reversal of fortunes, on July 30, the market moved higher shrugging off the rate hike announced by the Reserve Bank of India (RBI) on July 29. The 30-share BSE Sensex jumped 495.67 points, or 3.59 pc, at 14,287.21 aided by rally in global equities and fall in oil prices. The Nifty jumped 123.70 points, or 2.95 pc, at 4,313.55.

The key benchmark indices slumped sharply on July 29 after the RBI raised cash reserve ratio (CRR) by 25 basis points and repo rate by 50 basis points at its quarterly monetary policy review. The Sensex plunged 557.57 points, or 3.89 pc, at 13,791.54. The broader based S &P CNX Nifty was down 142.25 points, or 3.28 pc, at 4,189.85, a leading broker said.

The increase in CRR, with effect from August 30, is expected to suck out another Rs 9,000 crore from the banking system. The RBI also revised the GDP growth projection for 2008-09 to around 8 pc, from earlier 8 pc to 8.5 pc.

On July 28, a day before the announcement of RBI's monetary policy, the key benchmark indices scored marginal gains. However, trade was cautious. The Sensex gained 74.17 points, or 0.52 pc, at 14,349.11.

The broader-based S &P CNX Nifty rose 20.25 points, or 0.47 pc, at 4,332.10.

The BSE Mid-Cap index rose 70.15 points, or 1.26 pc, to 5,642.74 and the BSE Small-Cap index rose 201.32 points, or 2.96 pc, to 6,980.10 during the week. The wholesale price index rose 11.98 pc in 12 months to July 19, above the previous week's annual rise of 11.89 pc. Inflation for the week ended May 24 was revised upwards to 8.9 pc from 8.24 pc.

Foreign institutional investors (FIIs) sold shares worth Rs 1836.80 crore in July. FIIs sold shares worth Rs 26,705.10 crore in 2008.

Mutual funds have bought shares worth Rs 1,223.50 crore till July 30.

The exports rose 23.5 pc in June from a year earlier to USD 14.66 billion that helped narrow the trade deficit since May to USD 9.79 billion. Imports were up by 25.9 pc to USD 24.45 billion in June from a year earlier. Oil imports rose 53.4 pc to USD 9.03 billion.

Telecom minister A Raja recently said the government will hold a global auction for high-speed third-generation (3G) mobile services and have five operators initially. India has 60 MHz of 3G spectrum available, and will allow both GSM and CDMA 3G services, he said.

India's second largest listed telecom service provider by sales, Reliance Communications, tanked 13.18 pc to Rs 436.80 in the week after the reported the slowest profit growth in nine quarters. RCom reported 23.9 pc growth in consolidated net profit to Rs 1512 crore on 23.7 pc growth in revenue to Rs 5,322 crore in first quarter ended on June 2008 over first quater ended June 2007.

India's largest private sector firm by market capitalization and oil refiner, Reliance Industries, rose 7.10 pc to Rs 2299.75 in the week.

India's largest private sector bank by market capitalization, ICICI Bank, fell 2.25 pc to Rs 642.10. The bank's net profit declined 6.1 pc to Rs 728.01 crore on a 1.6 pc growth in operating income to Rs 9,429.98 crore in first quarter ended June 2008 over the same period.

Treasury losses and slower growth in advances have taken a toll on ICICI Bank's profits for the first quarter of the current financial year, brokers added.

UNI

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