Historic week for the markets as sensex crosses the 8,000 mark

Rex Mathew
10 September 2005

The markets opened the week on a strong note with the sensex well set on its course to the peak of 8000. After reaching very close to the mark, as close as 20 points, the Sensex gave up in late trades on Monday. The indices however managed to close the day with gains on new lifetime closing highs.

Markets consolidated on Tuesday, gathering momentum, as the government finally decided to bite the bullet and increased retail fuel prices. The market reaction was muted, as the increase in prices was much lower than required by the oil companies to cover their losses.

After Wednesday's holiday, the sensex wasted not much time on Thursday and crossed the 8000 mark in morning trades itself. Strong buying in large caps like Infosys, Reliance and ONGC helped the frontline indices to stage a smart rally and both Sensex and Nifty closed the day with gains of well over a per cent each.

The indices consolidated on Friday as the markets settled down at the peak levels. Good buying in banking stocks covered up for profit booking in other stocks and helped the indices to maintain levels.

The sensex gained 160 points or 2 per cent during the week and the Nifty added 39 points or well over one and a half per cent over the week.

Mid-caps were rather subdued during the week, though the index managed to close with gains for the week. The weekly gains on the CNX Mid-Cap 100 index were lower than the frontline indices. The index added 49 points or well over a per cent during the week.

Domestic economic and regulatory action

• The reaction from the government and regulatory bodies to the news of sensex crossing 8,000 was muted. After the recent controversy following a SEBI member predicting 16,000 levels for the sensex within a year, the words were chosen very carefully. The finance minister said the earnings multiples of the sensex and Nifty were not very expensive and there is no reason to worry about a bubble in the making.
• SEBI has finally voiced its concern about the runaway rise in prices of certain small stocks in this bull rally. The regulator said it has observed abnormal movements in some stocks indicative of price manipulation. SEBI stated further that it has advised the exchanges to move these stocks to trade-to-trade segment and impose 100 per cent margins on them.