"This consolidation was expected anyways as the valuations were not commensurate with the earnings of corporates. To an extent a correction in valuations was warranted," said Jagannadham Thunuguntla, equities head of brokerage and capital markets consultancy SMC Capital.

1. Sensex dips below the 16K level, may fall further
Posted On: 31-Oct-2009 14:23:43
Mumbai: The 30-share benchmark Sensex plunged 10 per cent in two weeks to fall below the
psychological level of 16,000 points even as the market showed signs of a further slide ahead on growing
concerns of a likely interest rate hike after the RBI raised inflation projection.Heavy losses afterthe
market touched more than analysts see its 17-month high of 17,493.17 on Diwali 'muhurat' trading on
October 17 as a healthy correction to the overbought market.
In the week to October 31, the Bombay Stock Exchange tumbled by 914.53 points or 5.44 per cent to end
the week at an eight-week low of 15,896.28 from its last week's close, while it recorded a 10 per cent fall
or that of 1,596 points from the 'muhurat' trading high.The broader 50-share Nifty of the National Stock
Exchange also dropped by 285.35 points or 5.71 per cent to end at 4,711.70 points from its previous
week's close. It had risen to a high of 5,176.80 during Diwali trading.
The market witnessed high volatility in the week under review due to heavy rollover of positions in the
derivatives segment as the October contract expired on Thursday.The market registered heavy losses on
October 27 as the RBI raised the statutory liquidity ratio (SLR) by one per cent to 25 per cent, which is
expected to drain liquidity to the tune of Rs 30,000 crore from the system.
Indian equities markets entered into a consolidation zone with analysts terming the downward movement
as long expected. A benchmark index fell 5.44 percent from itslast weekly close and ended trade below
the 16,000-mark.he 30-share sensitive index (Sensex) ended 914.53 points, or 5.44 percent lower, at
15,896.28 points at the weekly close Friday, as opposed to the previous week's close at 16,810.81 points.
The broader S&P CNX Nifty of the National Stock Exchange (NSE), too slipped, closing at 4,711.7
points, down 5.7 percent from its last weekly close.However, companies with large-to-medium market
capitalisation saw greater selling with the BSE midcap index ending 7.36 percent lower and the BSE
smallcap index losing 8.01 percent over thelast week.
"This consolidation was expected anyways as the valuations were not commensurate with the earnings of
corporates. To an extent a correction in valuations was warranted," said Jagannadham Thunuguntla,
equities head of brokerage and capital markets consultancy SMC Capital.The markets started on a
cautious note Monday ahead of the Reserve Bank of India's mid-year policy review Tuesday. The Sensex
ended a volatile day at 16,740.50points -- 70.31 points or 0.42 percent lower than Friday's close.
The Nifty followed a similar trajectory and ended in negative at 4,970.9 points, down 0.52 percent.Both
benchmark indices nosedived Tuesday as the RBI indicated in its policy review that it would start
tightening the monetary policy and look at exiting the stimulus measures.The Sensex shut shop at
16,353.4points -- 387.1 points or 2.31 percent lower than its previous close, and the Nifty too ended on a
similar note at 4,846.7 points, down 2.5 percent or 124.2 points.

2. On Wednesday, the Sensex recouped most of its losses to end trade at 16,283.49 points, down 0.43
percent or 69.91 points. The Nifty was also in the red at 4,826.15 points, down 0.42 percent from its last
close.The markets lost fourth straight day Thursday with the Sensex closing at 16,052.72 points, 1.42
percent or 230.77 points lower than its previous close. The Nifty too closed in the negative at 4,750.55
points, down 1.57 percent or 75.6 points from its last close.
The Sensex ended Friday below 16,000 points at 15,896.28 points -- 156.44 points or 0.97 percent down,
while the Nifty followed a similar path and closed lower at 4,711.7 points, down 0.82 percent.Data with
markets watchdog Securities and Exchange Board of India (SEBI) showed that foreign funds were net
sellers during the week, having sold scrips worth $12.8 million.
The top gainers this week on the Sensex were Tata Motors (up 7.2 percent), Ranbaxy Labs (up 4.8
percent), Wipro (up 2.9 percent), Grasim (up 1.6 percent) and Hindustan Unilever (up 1 percent).The top
losers were DLF (down 18.5 percent), Reliance Capital (down 14.5 percent), Reliance Infrastructure
(down 14.2 percent), Hindalco (down 13.9 percent) and Reliance Power (down 12.9 percent).
"Broadly speaking only about one percent of the quarterly results show a sound top line growth. Profits
might have increased, but that is not because of increase in core operations - cost cutting and other
income have contributed towards it," said Thunuguntla.