Sebi's move to ban short sales further weakened sentiment at major bourses last week. With Moody's downgrading India and the United States formally imposing economic sanctions, marketmen are gearing up for a rough time as bourses open on Monday.
The BSE Sensex ended the week at 3143.10, down 204.31 points over previous week's close of 3347.41.
The NSE-50 ended at 913.25, a fall of 57.90 points over the previous week's close.
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Rumours of a payment crisis kept market players on their toes throughout the week. 'Harshad Mehta stocks' such as BPL, Sterlite and Videocon continued to be hammered down despite reports that outstanding positions in the scrip have been placed with willing buyers.
All the three scrips hit the lower end of the circuit filter on all the trading days of the week.
After a sharp slide in the first two sessions, which saw the Sensex crash to a low of 2961 during intra-day trading on Tuesday, Sebi imposed a temporary ban on short sales to boost sentiment.
The following day, the index flared up by 240 points as short sellers rushed to cover their short positions.
However, this was only a temporary phenomenon as the Sensex crashed by over 250 points in the last two trading sessions of the week.
With most of the short positions having been covered, people with long positions were not able to find any takers for their holdings. The situation is expected to worsen next week when foreign funds come to press sales in the wake of Moody's downgrade.
The only highlights of the week were the excellent corporate results from State Bank of India and Bank of Baroda, which posted a growth of 38 per cent and 66 per cent growth in net profits, respectively. However, the figures brought little respite to these banks' scrips which came under sustained selling pressure on the last trading day of the week.
"The sentiment should remain bearish next week as foreign funds will definitely press sales following Moody's downgrade. Unless the government announces some positive measures to instil confidence among players, the Sensex should test 2800 levels in the next couple of weeks," said a BSE broker.
NEW DELHI: Asia's worsening financial and economic scenario, the imposition of ban on short sales by Sebi, a weakening rupee, economic sanctions by the United States and apprehensions of political uncertainty at the Centre led to share prices displaying one of the wildest ever fluctuations in a single week at the Delhi Stock Exchange for the week ended June 19.
Reflecting the overall sentiment, the benchmark DSE index fell below the psychological 700-point mark twice during the week and finally closed at 693.81, down 36.99 points from the previous week's 730.80 points.
The week, in fact, opened on a depressing mood with the Asian crisis sucking the Indian bourses into its vortex. Foreign funds sold aggressively, in keeping with the dark mood prevalent in the region. But the near absence of domestic institutions, particularly the Unit Trust of India, accentuated the fall, brokers said.
In an attempt to arrest this free fall in share prices and further enhance the safety and integrity of the bourses, Sebi imposed additional margins of ten per cent on incremental carryforward position and five per cent on concentrated position in scrips.
But even this measure failed to arrest the slide and the index dropped by over 39 points on the opening day.
Faced with a market that has been spinning out of control, Sebi went ahead and imposed a ban on short sales on stock exchanges on Tuesday, a measure that has not been resorted to since the Securities Scam in 1992
This, coupled with the renewed efforts of investment institutions and nationalised banks, averted a near collapse of the exchange as late buying helped the market inch up by 3.46 points.
Marketmen said institutions and banks, reportedly on instructions from the government, stepped in at around noon and made heavy purchases of index weighted stocks.
Sensing the change, operators who had sold short, also began covering positions which further aided the sentiment and helped the rally in share prices.
Sebi's magic worked and share prices skyrocketed for the first time during the week on Wednesday. The spurt was in fact the steepest ever pecentage point rise in several months.
Hectic covering with sustained buying by domestic funds, particularly Unit Trust of India, accelerated the Sensex rise. Dealers said funds bought Rs 100 crore of share during the day taking the total to Rs 225 crore in just two days. However, Sebi's measure did not receive much acceptance from the brokers who even threatened to move the courts against it and, as a result, the rally triggered by the measures proved short-lived as share prices crashed again.
The slide gained momentum on the final trading day of the week on announcement of details of the economic sanctions by the United States, a major financial crisis in the East-Asian financial markets and apprehensions of political uncertainty at home totally wiping off the gains made earlier this week.
Large scale and hectic selling by both domestic and foreign funds coupled with lack of any buying support saw share prices at the DSE go on a tailspin with the benchmark index closing at 693.81 points.
Marketmen said with the US announcing details of the sanctions imposed against India and its likely implementation, operators turned panicky and offloaded huge amount of heavy-weighted scrips. Moreover, with the rest of the Asian markets witnessing another crisis, foreign funds also refrained from any major buying and were seen offloading huge quantities of shares throughout the day.
CHENNAI: Equities suffered a further setback on the Madras Stock Exchange during the week ended June 19.
Prices of pivotals and popular scrips sharply declined on persistent selling.
However, some popular counters recovered on buying support on Wednesday and again declined to settle with small to notable losses on a dull trading during the week under review.
The market sentiment could be seen in the Madras Stock Exchange index which closed 55.66 points lower on Monday, further reacted to 3726.78 points but recovered to 3825.09 and on Wednesday only to slip back to finish at 3749.56 points against the previous week's close of 3800.44 points, losing by 51.88 points.
Alac Housing, Bank of India, D Square Soft, Ennore Foundries, ICICI, ITC, Karnataka Bank, Larsen & Toubro, Macmillan, Penta Comm, Prem Mill, Reliance, Rolta, RS Software, Satyam Computers, SBI, Soft Solution, Silverline, and Telco were actively traded.