Indices lose substantially during the week as global weakness continues

Rex Mathew
15 October 2005

This week was one of the worst in recent memory for the stock markets as the frontline indices came crashing down under heavy selling pressure. The sell off during the last week of September did not last long and the markets recovered within days and went on to post new highs. Many traders who were expecting a similar recovery after last week's correction could only watch as the indices continued to slide.

Markets opened the week on a strong note on Monday but gave up all the gains towards the end of the day and closed with marginal losses. Tuesday afternoon saw a smart pull back which helped the indices to break a 4-day losing trend and close with decent gains. Traders who had interpreted this recovery as a turnaround in the markets were hardly prepared for the sell-of after Wednesday's holiday.

Both Sensex and Nifty lost 2 per cent each on Thursday and Friday as FII's resorted to selling in both cash as well as derivatives. Though there was some buying from domestic mutual funds, it was not enough to arrest the slide in the markets.

The Sensex lost 290 points or close to two-and-a-half per cent during the week and the Nifty shed 90 points or two-and-a-half per cent over the week.

Mid-caps remained subdued throughout the week as the popular mid-caps could not regain momentum. Even on Tuesday when the frontline stocks managed a recovery, the mid-caps remained weak. Losses on mid-caps were lower on Thursday when the main indices slid 2 per cent. They lost ground on Friday after opening on a positive note. The CNX Mid-Cap 100 index lost 127 points or over 3 per cent during the week.

Domestic economic and regulatory action

• The fiscal numbers for the first six months of the current financial year presents a relatively good picture. Considering the fact that the budget estimates were considered way too optimistic, the scorecard after the first half is satisfactory.

  Tax collections have been very healthy, helped by high crude prices and expanding service tax base. Customs duty collections have increased almost 25 per cent as overall imports have been high so far during the year. Growth in excise collections is way off the target and is the only disappointment on the revenue front.