Another record setting week for the markets as rally continues

Rex Mathew
17 September 2005

Most analysts had predicted a correction after the Sensex scaled the 8000 mark last week. They expected institutional investors to book some profits as the markets appear to be overheated in the short term. In fact, many overseas brokerages who had called the markets as overvalued when the Sensex was at 7000, were predicting a more than 10 per cent correction. All of them were proved wrong as the markets continued to seek new levels with barely a pause during the week.

Sensex crossed the 8100 mark on Monday itself and continued the uptrend to touch 8200 by Tuesday. Nifty closed at 2500 on Tuesday as strong buying was seen in frontline banking, auto and telecom stocks.

Indices corrected in intra-day trades on Wednesday as profit booking emerged at higher levels, though late buying reduced the losses. The Sensex added more than 90 points each on 2 successive days on Thursday and Friday. Heavy buying was seen on select heavyweights like ONGC, TCS, Reliance, HDFC and Bharti. The Sensex closed well above the 8300 mark and the Nifty crossed 2550 on Friday.

The Sensex gained 243 points or close to 3 per cent during the week and the Nifty added 68 points or two and three quarters of a per cent over the week.

Mid-caps also maintained the momentum during the week though gains for the week were lower than the frontline stocks. The CNX Mid-Cap 100 index opened the week on a strong note on Monday, gaining more than a per cent to close above the 3800 mark for the first time. The market correction on Wednesday affected the smaller stocks more. The mid-cap index added 56 points or one and a half per cent during the week.

Domestic economic and regulatory action

• Foreign trade trends during the first quarter presents and interesting picture. Total exports during the quarter increased by 22 per cent in dollar terms as compared to the previous year to cross $21 billion. Growth in imports was higher at 34 per cent during the quarter.

  The best performers among the export sectors were petroleum products, machinery and minerals. Petroleum products exports surged more than 50 per cent to over $2 billion. Machinery exports were also higher by more than 50 per cent and at over $2.2 billion were the second largest export item after gems and jewellery. The decline in commodity prices globally did not have much of an impact on exports of ores and minerals, which increased by more than 30 per cent.

  Though aggregate exports by the textile sector grew only 4 per cent during the quarter, there are signs that textile exporters are finding their feet in the post-quota world. Garment exports were higher by 10 per cent in value terms during the quarter. This is an encouraging performance, given the fact that there is considerable pressure on prices in the international markets because of large scale Chinese exports.