Sensex sheds 2.3% this week

Markets fluctuated between gains and losses in a volatile week amid slew of news flow. Price manipulation and margin call trigger weighed, while, robust index of industrial production (IIP) data in October brought some relief to the markets.

The Sensex shed 2.3% this week, to 19,509. The S&P CNX Nifty closed at 5857, clocking its 4th weekly loss in last five weeks.

Markets commenced the week on a positive note, and touched an high of 20,038 on Monday, but investors cashed out of banks, fretting over impact on banks margin after they raised deposit rates. News of price manipulation sparked heavy sell-off in the midcap and smallcap stocks which led to the margin calls getting triggered, spurring a chain reaction dragging markets down for three consecutive sessions. Sensex hit a low of 19,074 on Friday morning and made a smart come back led by gains in banking, midcap and smallcap shares, as investors cashed in bargain buys. The benchmark Sensex rose 1.4% or 267 points on Friday, snapping a three day losing streak, on better-than-expected industrial output growth of 10.8% for the month of Octobor, reviving investor sentiment.

The S&P CNX Nifty gained 91 points, at 5857.

Avinash Gupta, Vice President Research Equity, Bonanza Portfolio said. The market is expected to remain volatile. The undercurrent remains weak, but the long term trend is up. The market is expected to consolidate around current levels of 5750 on the Nifty."

In world markets, investor optimism was curtailed in Asia on China rate hike. China's exports and imports soared for the month of Novemeber, which ratched up pressure on the government to raise rates to tame inflation. China raised reserve requirements for the banks by 50 bps after the markets shut in Shanghai on Friday. China's Shanghai Composite ended higher by 1.1%, Hong Kong's Hang Seng ended flat. Japan's Nikkei Stock Average fell 0.7%, and South Korea's Kospi also ended marginally lower by 0.1%.

Midcap and smallcap stocks which were whipsawed badly staged a strong rally on Friday.

Edelweiss said in a research note, "We view this correction as an attractive entry point into a few midcap stocks that offer a high sustainability of earnings and healthy return ratios." Edelweiss has given buy recommendations on Dish TV, BGR Energy Systems and Federal Bank. Banking shares which skidded between 10-20% during the week also made a come back.

The week saw banking heavyweights slump. SBI, the country's largest bank, crashed 11% to Rs 2,737.

HDFC Bank plunged 7% to Rs 2,220. ICICI Bank shed 5.4% to Rs 1,118.

Reliance Communications was one of the biggest losers and dropped 9.5% to Rs 126. Bharti Airtel was down 4.3% to Rs 331.

DLF and Reliance Infrastructure were the major infrastructure losers and dropped 7.5% and 6.5%, respectively.

Bajaj Auto was down 6.5% at Rs 1,492. Tata Motors slipped 5% to Rs 1,248. Hero Honda and Mahindra & Mahindra dipped 2.6% each to Rs 1,783 and Rs 778, respectively.

Other losers included Cipla, HDFC and Jaiprakash Associates.

Meanwhile, Wipro gained 5% at Rs 450. Infosys added 0.8% at Rs 3,147. However, TCS was down 1.8% at Rs 1,075.

Among PSU stocks - NTPC advanced 3.8%, followed by BHEL (3%).

Jindal Steel added 2.3% to Rs 696. Maruti Suzuki moved up 0.8% at Rs 1,412. Tata Steel was marginally up at Rs 618.

Market heavyweight, Reliance, added 1.7% to Rs 1,024.