IT helps Sensex limit loss

Index pulls back from a 500-point drop in early trades

Software companies helped domestic stocks escape yet another Black Friday. The Sensex tumbled more than 500 points (3.5 per cent) in the morning session on concerns over the US sub-prime mortgagees crisis but recovered some ground later.

It closed at its lowest level since July 5 at 14,868.25, down 231.90 points, or 1.54 per cent, from the previous close but this was a recovery of nearly 300 points from the day's low of 14,570.89. The broader NSE-50 Index closed at 4,333.35, down 69.85 points, or 1.59 per cent. 

MAJOR WORLD INDICES THIS WEEK
Indices	03-Aug	10-Aug	% change
Hang Seng	22538.44	21792.71	-3.31
Sensex	15138.4	14868.25	-1.78
FTSE 100*	6224.3	6116.10	-1.74
Nikkei 225	16979.86	16764.09	-1.27
Dow Jones*	13181.9	13104.00	-0.59
* Till 8 pm on 10 Aug

The initial fall was in tune with the global market rout on Friday. Stocks in the US (the Dow was down 100 points at the time of going to the press) and Europe (London's FTSE was down by more than 3 per cent and Germany's Dax lower by nearly 2 per cent) opened weak on Friday while other Asian markets, including Japan and Korea, closed at their lowest level in five months as sub-prime losses forced the US Federal Reserve ($43 billion) and the European Central Bank ($178.4 billion) to pump in funds to the banking system in the last two days to buy mortgage-backed securities and stabilise the credit markets. A sub-prime loan is a high-risk home loan. 

BSE SECTORAL INDICES
Date	08/03/2007	08/10/2007	% change
Losers
Realty	7618.30	7263.54	-4.66
Metal	11324.63	10863.61	-4.07
Bankex	8048.51	7773.71	-3.41
FMCG	1957.11	1903.05	-2.76
Cons durable	4173.66	4088.66	-2.04
Cap goods	12976.28	12768.35	-1.60
PSU	7019.50	6918.67	-1.44
Auto	4796.65	4736.40	-1.26
Healthcare	3628.45	3601.09	-0.75
Oil & gas	7808.34	7755.96	-0.67
Gainer
IT sector	4704.30	4774.13	1.48

Global funds in India, whose net sale of stocks was worth Rs 742.30 crore on Friday, pushed down the rupee to its biggest weekly decline in two months, and this triggered fresh buying in shares of infotech companies, which earn most of their revenues in dollars.

Market observers, however, continued to be optimistic about the India story. They said the Indian stock market was relatively insulated to the defaults in the US credit markets, and the strong economic growth, robust earnings by firms and rising domestic consumption continued to make the country one of the most attractive markets in the world.

Prudential Asset Management moved up its India rating from underweight to neutral. "We may even go overweight on India, depending on how significantly other markets underperform," said Guy Strapp, regional head of investment management (Asia), Prudential Asset Management.

"Currently, buying in IT stocks is due to the potential pull-out of foreign institutional investors from the Indian stock markets due to the weakening US sub-prime debt market. We see the Indian rupee weakening from current levels and this gives a good window of opportunity to accumulate Indian IT companies' stock," said Suveer Chainani, IT analyst with foreign stockbroking firm Macquarie Securities.