Markets steady as traders await more corporate results

Rex Mathew
16 July 2005

The week opened on a strong note with a broad based rally on Monday as the markets brushed aside worries about terrorism and record crude prices. Expectations about robust corporate results and steady FII inflows helped the Sensex to close above 7300 for the first time ever.

Hopes about the continuation of strong corporate performance were somewhat rattled when Infosys kicked off the earnings season on Tuesday with quarterly numbers which failed to excite the markets. Though the indices tried to take it in their stride in the morning, they saw a sharp decline later in the day.

On Wednesday and Thursday markets saw the volatility continuing despite good numbers from ACC and HDFC Bank. Weakness in technology and oil stocks held the markets under pressure.

Market worries about the subsidy sharing by listed oil companies were somewhat allayed as the broad contours of the new sharing formula proposed by the government came out. Markets welcomed the formula with a strong rally in the closing hours on Friday. Rumours of some major announcement from Reliance saw the stock surging ahead and leading the rally which was also supported by a recovery in technology stocks.

Mid-caps escaped much of the volatility in frontline stocks, except for Tuesday when the index dropped sharply in the afternoon after holding higher levels in the morning. The mid-cap index managed to close with gains on all days except Thursday. The index scaled new lifetime highs on all days and closed the week at yet another lifetime high.

Domestic economic and regulatory action

• After causing some concerns during the months of March and April, industrial output for the month of June rose much higher than the same month of previous year. The Index of Industrial Production surged 10.8 per cent during May '05 as compared to a growth of 6.8 per cent in May '04.