Markets bleed for second straight week

Mumbai, Aug 5: Bearish global indices forced a correction on local bourses, as the market settled on a weak note for the second straight week, amidst intense volatility, experts observed and pointed out that despite the market gaining in 4 out of 5 days of the week, it still settled lower for the week.

The benchmark index Bombay Stock Exchange (BSE) Sensex lost 96 points, or 0.63 per cent, at 15,138.40, while the broader National Stock Exchange (NSE) S&P CNX Nifty lost 44 points, or 0.96 per cent, at 4,401.55 last week.

The BSE 30-share Sensex rose 26.34 points at 15,260.91 on Monday, with shares from banking sector and select real estate stocks gaining on speculative buying ahead of Reserve Bank of India's (RBI's) monetary policy on Tuesday.

On Tuesday, the BSE 30-share Sensex galloped 290.08 points at 15,550.99 despite the central bank increasing the cash to reserve ratio (CRR) by 50 basis points (bps) to 7 per cent.

The Sensex plunged 615.22 points to settle at 14,935.77 on Wednesday, its third biggest single day point fall ever. It opened with a downward gap on intense selling pressure on global meltdown.

Next day, the Sensex gained 49.93 points at 14,985.70 on support from global markets.

Recovery continued on the last trading day of the week on Friday, as the Sensex advanced 152.70 points at 15,138.40, with all the sectoral indices on BSE posting gains. Shares from real estate, banking and cement were in demand.

State Bank of India (SBI), BHEL, Reliance Communications and Maruti Udyog were the week's leaders, while Reliance Industries (RIL), TCS, Wipro, Infosys and Satyam Computers, Tata Motors, Hero Honda and Mahindra&Mahindra (M&M) were the laggards.

On Tuesday, the apex bank left the reverse repo rate, the rate at which it absorbs excess cash from banks, unchanged at 6 per cent. It also kept bank rate unchanged at 6 per cent.

The RBI increased CRR by 50 basis points to 7 per cent from 6.5 per cent (100 bps is equal to 1 per cent). It said it would endeavour to contain inflation close to 5 per cent in 2007-08 and in the range of 4-4.5 per cent over the medium term.

The central bank also maintained its financial year (FY) 2008 gross domestic product (GDP) growth forecast unchanged at 8.5 per cent. It also removed the Rs 3,000 crore cap on daily reverse repo transaction from tomorrow onwards, the window through which it absorbs liquidity in a bid to check volatility in call money rates.

India's trade deficit in June widened to USD 7.33 billion, official data released on Wednesday showed. Imports surged 36.7 per cent to 19.2 billion US Dollars in June 2007, while exports rose 14 per cent to USD 11.87 billion, over the corresponding period last fiscal.

On Thursday, the Bank of England left interest rates on hold at 5.75 per cent as expected. On the same day, the European Central Bank (ECB) also kept its benchmark interest rates unchanged at 4 per cent.

Official data released on Friday showed that the wholesale price index (inflation) slipped to 4.36 per cent in the week ended July 21, from 4.41 per cent in the previous week. The government also revised the inflation rate for the week ended May 26 to 5.15 per cent from 4.85 per cent.

UNI