The last week of July, which also happened to be the derivatives expiry week, was a tepid one for the markets. The indices ended soft on the first and last day and oscillated between alternate days of buying and selling during the interim period to end the week marginally lower. The BSE benchmark index did hit a high of 18,194 during the course of the week, but was unable to sustain the 18k mark and ended at 17,868, lower by 262 points or 1.4% and the Nifty settled at 5,367, down 81points or 1.5%. There was outperformance on the broader market front, though. The BSE mid-cap index fell 0.34% and the Small-cap index fell 0.96%.
Meanwhile, the Reserve Bank of India (RBI) at its Q1 monetary policy on Tuesday, raised its key short term interest rates for the fourth time this year. The central bank raised the repo rates by 0.25% and the reverse repo rates by 0.50% respectively in an attempt to curb the surging inflation.
The RBI also raised GDP forecast from 8% to 8.5% for the year ending March 2011 (FY 2011). The central bank said the upward revision in growth forecast is primarily based on better industrial production and its favourable impact on the services sector.
The core sector saw a deceleration for the third month in a row. Growth in six key infrastructure sectors, which comprise the core sector, decelerated to a 10-month low of 3.4% in June from 6.3% during the corresponding period in 2009, primarily due to the high statistical base effect of last year. The core sector has a 26.6% weightage on the Index of Industrial Production (IIP).
Food inflation fell sharply to 9.67% for the week ended July 17 from 12.47% in the previous week, primarily on account of low statistical base effect, as prices of food articles continued to rise on a sequential basis. Food inflation, as measured by the Wholesale Price Index (WPI), stood at 15.05% during the corresponding week in 2009 and 12.47% in the previous week. This is the first time that the food inflation has come down to single digits in a year.
The top weekly losers on the BSE were Maruti (weakened by 11.7% at Rs 1198), Jaiprakash Associates (shed 8% at Rs 118) and Hero Honda (lost 7.2% at Rs 1815). L&T, DLF and RCom became poorer between 5% and 7% each. And index heavyweight RIL continued with its sluggish ways, losing another 4.7% at Rs 1009.
On the other hand, M&M topped the gainer's list on the BSE Sensex, strengthening by 5.5% at Rs 661, HDFC Bank appreciated by 4.3% at Rs 2127 and ITC added 2.6% at Rs 308. Hindalco, ACC and Tata Motors were the other significant gainers.
Capital goods and oil were the laggards among the sectoral indices. In the capital goods space, L&T weakened by 7.2% at Rs 1797, Jyoti Structure shed 6.1% at Rs 154, Punj Lloyd lost 5.9% at Rs 126 and Suzlon Energy lost 4.8% at Rs 56. And in the oil space, RNRL weakened by 5.6% at Rs 41, Gail shed 5.5% at Rs 438 and RIL lost 4.7% at Rs 1009.