The pessimism was aggravated following lower-than-expected earning numbers posted by Satyam Computers and HCL Technologies.
Along with the disappointment over the earning numbers, the lowering of full year net profit numbers by Satyam also sent nervous signals in the market which led to battering of software stocks across the board. In the aftermath of the results, Satyam lost over 12 per cent in the last two trading sessions.
During the week the Sensex lost 82.53 points or 2.44 per cent to close at 3287.86 points. The weakness on the bourses continued despite FIIs pumping in Rs 716.20 crore during the first three weeks of January.
Dealers said, though FIIs are buying on a sustained basis, the aggressive approach which has been seen throughout the month of January is not there and that is what is unnerving for the market players.
Apart from the Satyam and HCL Technologies disappointment, there were also fears of the impending US attack on Iraq and rising diplomatic tension with Pakistan.
A dealer at a domestic brokerage said: "The 70 point fall during the last two trading sessions was also on the back of traders unwinding their open position in the derivatives segment."
The dealers added: "Since Decemeber 2002, traders had built a huge long position on the derivatives market in anticipation of big FII inflows, but in the absence of aggressive FII approach, traders are unwinding their long positions."
Despite the battering seen in most frontline sofware and index pivotals, banking scrips bucked the trend on sustained buying from investors and institutions. Market players expect banking stocks to post strong earning numbers following the clearance of Securitisation bill and treasury gains. Dealers said that in the coming quarters private sector banks will manage growth on the back of an increase in core banking businesses such as advances and treasury income.Some of the other stocks that bucked the overall weak trend were from the the steel sector.
The steel sector got a boost on the back of a sustained rise in steel prices over the last few quarters.
At the start of January 2003, steel makers had hiked prices by an average of Rs 700 per tonne.
During the week gone by, quarterly results had a big role to play and the results effect is likely to get intense in the coming week.
Some of the big corporate houses planning to unveil quarterly numbers in the coming week are BSES, Grasim, Polaris Software, Zee Telefilms, Dr Reddys Laboratories, Hindustan Lever, Indian Oil, Mahindra & Mahindra, Laresen & Toubro, IPCL, HPCL, Balaji Telefilms and Reliance Industries.