Inflation takes toll on market

Inflation takes toll on

BILAL HUSSAIN
Srinagar, June 22: The double digit inflation figure this week has brought down the BSE benchmark sensitive index down to15 K level. This is the fifth continuous week that goes in the lap of bears, weak global cues, rising inflation, and high oil prices aided market to end in red. Experts believe that monetary tightening measures from the central bank, which took a heavy toll of bank, realty and auto stocks this week. Foreign institutional investors were among major sellers throughout the week resulting in value erosion of stocks across all the sectors. Domestic mutual funds did make some buying but could not make a major impact to arrest the downfall of indices. The sensex ended the week with a loss of 4 per cent and closed at 14,571.29, the nifty lost 3.75 per cent and closed at 4347.55.

Market wrap: On Monday a firm trend on the global bourses managed sensex to crossed 15500 mark and hit an intraday high of 15,553.37 finally closed at 15,395.82 up by 206.20 pts. The nifty has hit 4600 mark and touched a high of 4617.70 and was up by 55.4 pts to settle at 4572.50. Markets had opened on a quiet note and remained flat for first one hour of trade. But after that bulls came in limelight for rest of the day. The nifty closed above 4600 and the sensex above 15500 levels. The sensex on Tuesday shot up by 301.08 pts to settle at 15,696.90, nifty closed the day at 4653 up by 80.5 pts. The sensex on Wednesday touched an intraday low of 15,390.22 and high of 15,789.62, before closing the day at 15,422.31 down by 274.59 pts, nifty plunged 70.6 pts closed at 4582.40. On Thursday the nifty lingered around its psychological mark of 4500 throughout the day but managed to close just above that level. The nifty closed day at 4504.25 down by 78.15 pts, sensex plunged 334.32 pts to finish at 15,087.99, after hitting a low of 15,051.66 pts. The sensex crashed nearly 569 pts and the nifty 171 pts while touching day’s low. The sensex closed at 14,571.29 down by 516.70 pts and the nifty at 4347.55 down by 156.7 pts. All BSE and NSE indices closed in red. ONGC is the only stock, remained strong through the day. The Wholesale Price Index rose 11.05 per cent on YOY (year on year) basis highest since May 1995. Experts say that RBI will have to use monetary tools to contain inflation. They feel that fuel price hike has not fully reflected in inflation numbers. It will see more impact in the next few weeks. They expect that the RBI will hike CRR or Repo rate before Monetary Policy. It will affect growth in infrastructure sectors as capital availability become scare, squeeze banks margin and impact on auto sales.

Institutional Front: On the institutional front, for the week ended June 20, mutual funds emerged as net buyers to the tune of Rs 4 billion while the Foreign Institutional Investors emerged as net sellers to the tune of Rs 9 billion.

Experts’ opinion: Experts believe that investors should take the downward movement of markets for good by churning their portfolios by picking the stocks with good names in markets. Fundamentals of companies should be given preference over all other indicators.