In addition to the spiralling inflation on Friday, there was yet another set of figures that ruined investors’ sentiment was that of Index of Industrial Production (IIP). Anticipating better quarterly results by the Information Technology (IT) bellwether Infosys Technologies helped the key indices to open the day on a positive note. However, it took a southward turn later in the day as the crude prices once again spurted to $145 a barrel intra-day on Friday. The Nymex crude further moved upto $146.73 a barrel, up $5.08 at the time of going to the press.
The 30-share Sensex of the Bombay Stock Exchange (BSE) amidst improving trading volumes ended the day at13,469.85 points posting a loss of 456.49 points or 3.28% while the broader S&P CNX Nifty of the National Stock Exchange (NSE) breached an important level of 4,100 level to end the day at 4,049 points losing 113.20 points or 2.72%.
The week which began on a positive note for the markets saw the key indices to end at almost the same levels at which it began. Getting succumbed to the political uncertainty in the early part of the week, key indices enjoyed a handsome rally in the middle part of the week as the Left party withdrew support to the United Progressive Alliance (UPA) and Samajwadi Party’s (SP) assurance for government’s survival gave a fresh hope for the initialization of the stalled reform process.
Inflation for the week ended June 28 stood at 11.89% as against 11.63% for the earlier week while the IIP for the month of May declined to 3.8% as against 10.6% in the same period of last year. Also the manufacturing and Capital Goods (CG) growth that saw a dip at 3.9% from 11.3% (YoY) and at 2.5% versus 22.4% respectively led the investors to book profits in these sectors on Friday. The BSE CG index ended the day with a loss of 4.99% while the BSE Power lost 4.28%.
P K Agarwal, President, Research, Bonanza Portfolio said, “Indian markets traded flat during the early part. However, lower than expected inflation data saw some buying interest amongst investors. But as the poor Industrial growth numbers came, sell off was seen in the market. Markets are likely to remain volatile during the next week”.
Profit booking in the IT stocks also brought the BSE IT index down by 281.77 points or 6.73% to end the day at 3,907.63 points. Some experts also attribute Friday?s plunge to the report by the Standard & Poor’s (S&P) at a possible downgrade of India’s sovreign rating if the current fiscal problems persisted.