Weekly review: Mkts post steepest losses

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After a smart rally in the initial two weeks of the new calendar year, the stock markets came under a bear shadow, undergoing the biggest weekly correction due to various negative factors.

In the week under review, the Bombay Stock Exchange (BSE) benchmark, Sensex, plunged by 1,813.75 points or 8.71 per cent to end at 19,013.70 from last weekend's close of 20,827.45.

Similarly, the broader S&P CNX Nifty of the National Stock Exchange (NSE) tumbled by 494.80 points or 7.98 per cent to end the week at 5,705.30 from previous weekend's close of 6,200.10.

According to technical analysts, panic selling is sparked off when a certain technical level is broken and that was what happened on Friday, the day Sensex logged the fourth-biggest fall of 687 points in absolute terms after it breached the support at 19,337.

Another factor was the sudden selling onslaught by hedge funds, which booked profits to cover up their mortgage-related losses in the US markets and elsewhere.

In addition, foreign institutional investors (FIIs), which are supposed to allocate funds for the new calendar year, pulled out heavily in the week, their withdrawals were amounted to over Rs 6,200 crore (including the provisional number on Friday).

Global factors, too, weighed on the market. All emerging markets witnessed heavy sell-off triggered by fears about a likely recession in the US, the world's largest economy.