By IANS
New Delhi : In a week marked by major turmoil and wild fluctuations in Indian equity markets, a key index shed close to 15 percent on the three days it lost ground but managed to moderate losses after some interventions by policy makers to boost confidence, notably in the US.
The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) saw one of its wildest weekly fluctuations ever during the week ended Friday but managed to close with a largely moderated decline of 652.04 points or 3.43 percent.
In fact, the decline was sharper for two other broader indices, with a loss of 9.81 percent for the mid-cap index and 14.30 percent for the one representing small-cap stocks, data with the Mumbai bourse showed.
It was also a week when net investment by foreign institutional investors (FIIs) was in the negative in each of the five trading days, selling equities worth a whopping $2.451 billion, data with the market regulator showed.
The week started on an extremely pessimistic note, as the key index was down 1,408.35 points, or 7.41 percent, after witnessing one of the steepest intra-day drops ever of close to 2,000 points.
This was also the steepest closing fall since May 2004, caused by concerns over possible recession in the US, leading to investors losing some $170 billion in a single day in terms of market capitalisation.
Tuesday was no better and even forced authorities to suspend trading for an hour when the lower circuit breaker was breached within a few minutes of trading. It required a pep talk by Finance Minister P. Chidambaram to calm sentiments.
“The fundamentals in the domestic economy are quite strong. Today’s market fall reflects the continuing uncertainties in the global economy and not any change in the fundamentals of the Indian economy,” the finance minister said.
As a result, the losses for the Sensex were moderated when trading re-commenced, ending the day with a loss of 875.41 points, or 4.97 percent. But even this drop marked a loss of a whopping 4,097 points, or 19.67 percent over seven days.
Some semblance returned Wednesday and the index gained 864.13 points, or 5.17 percent. But this positive mood was short lived as the index closed Thursday with a loss of 372 points, or 2.12 percent.
Then came some positive announcements from the US – the leaders of the House of Representatives and the George W. Bush administration said they had agreed on a $150 billion package to avoid a recession in the world’s largest economy.
The package included payments to some 115 million Americans to help overcome the mortgage crisis and new tax breaks for both large and small companies in a bid to step up investments.
“The entire crisis in recent weeks was caused by the uncertain conditions in the US. So the mood had to turn positive after the Bush administration took steps to avert further setbacks,” said an analyst with a leading brokerage in Mumbai.
Among the 13 sector-specific indices, only those for banking – up 0.06 percent – and information technology – up 0.26 percent – managed to stay afloat during the week under review.
While the index for oil and gas scrips lost the most – down 11.09 percent – that for state-run companies came next with a loss of 10.31 percent, followed by 9.59 percent for metals and 9.49 percent for consumer durables.