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Mumbai:
Benchmark indices of Indian equities markets slumped almost three
percent this week as investors dumped shares taking cues from the
turmoil in global markets amid fears of recession in the US and
European economies.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange
(BSE) ended the week 2.69 percent or 466.24 points down at
16,839.63 points.
Indian markets witnessed extremely volatile trading this week amid
global mayhem following a ratings downgrade of the US economy by
Standard and Poor's (S&P) last weekend.
The international credit rating agency Aug 5 downgraded the top
notch AAA credit rating of the US government's ability to pay back
its creditors and investors to AA+. This is the first time the US
economy rating has been downgraded.
The benchmark Sensex plunged over 500 points in the early morning
trade Monday. Amid volatility, the 30-scrip index lost 291 points
on the first trading day of the week.
Although the Sensex rebounded 272 points Wednesday, the gain was
temporary and the index slumped 243 points on the weekend.
At the National Stock Exchange, the 50-scrip S&P CNX Nifty also
slumped almost three percent this week. The Nifty closed 1.27
percent down at 5,072.95 points Friday.
Speculations of another rate hike by the Reserve Bank of India (RBI)
also dampened investors sentiments at the Indian markets.
Latest data released showed industrial output growing by a healthy
8.8 percent, which sparked fears that the RBI may hike rates again
in September to control rising inflation.
"For the time being it will strengthen the case for further
tightening by the RBI. Food inflation has again firmed as per the
latest data. Given that demand has not moderated to the extent
desired by the RBI, markets would be concerned that another rate
hike could not be ruled out," said Sanjeev Zarbade, vice president
with Kotak Securities.
Major Sensex losers Friday were: Tata Motors, down 5.26 percent at
Rs.801.10; Hindalco, down 4.04 percent at Rs.150.85; Jaiprakash
Associates, down 3.28 percent at Rs.61.95 and Tata Power, down
3.12 percent at Rs.1,088.35.
Gainers included: Jindal Steel, up 2.57 percent at Rs.524.70; M&M,
up 1.82 percent at Rs.740.30; Hero MotoCorp, up 1.79 percent at
Rs.1,890.80 and ONGC, up 0.76 percent at Rs.279.30.
After witnessing heavy selling pressure, major Asian markets ended
the week on a dull note.
The Japanese Nikkei ended the week 0.2 percent lower at 8,963.72
points
Hong Kong's Hang Seng ended marginally down at 19,620.01 points,
while the Chinese Shanghai Composite index nudged up 0.45 percent
to 2,593.17 points.
European and American markets, however, ended the week on a
positive note despite mayhem during the first 2-3 trading
sessions.
Short selling restriction of financial stocks in some Euro-zone
countries helped buying interest in banking stocks.
Britain's FTSE 100 closed 3.04 percent higher at 5,320.03 points,
the German DAX advanced 3.45 percent at 5,997.74 points and the
French CAC 40 closed 4.02 percent higher at 3,213.88 points
Friday.
American markets also ended the week on a positive note. The Dow
Jones Industrial Average closed 1.13 percent higher at 11,269
points and the S&P 500 index advanced 0.53 percent at 1,178.81
points.
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