Wkly Review: FIIs' F&O activity in limelight

The Sensex began the week on a positive note and soon scaled to a mid-week high of 10,753. However, heavy selling by foreign institutional investors (FIIs) in the derivatives segment spooked the market, and the index went crashing down to 10,377 on Thursday.

However, steady FII inflows in the cash segment, coupled with aggressive buying by cash-rich mutual funds and some short covering, propelled a fresh upmove in the market.

As mentioned in the BS Research Alert on Friday, three foreign funds were short of positions worth Rs 4,000 crore. The buzz is that these foreign funds had gone short in anticipation of interest rates going up in Japan. At the same time, Japanese funds were selling Indian equities worth Rs 1,000 crore. The Bank of Japan did not revise rates on Thursday, and the Japanese funds stayed in the "Buy India" mode.

The buying momentum was so strong on Friday that the index soared to a new all-time intra-day high of 10,782 - up 406 points from its intra-week low.

The Sensex finally ended the roller-coaster week with a smart gain of 170 points at 10,765.

FII activity held centrestage in the market this week. FIIs were net buyers of stocks to the tune of Rs 1,015 crore in the first four days of the week. Their gross purchases during the period totalled Rs 11,785 crore and gross sales stood at Rs 10,770 crore.

However, it was their acquitiy in the futures & options segment that led to wild swings in the market. They were net sellers on all four days of index and stocks futures to the tune of Rs 4,561 crore.

MFs mopped-up shares worth Rs 866.40 crore between March 6-9 - while their gross purchases totalled Rs 3,048 crore while their gross sales amounted to Rs 2,181 crore.

Cement stocks led the upmove this week. ACC soared over 11% to Rs 760. Gujarat Ambuja gained 9% and Grasim was up 4.4% this week. Cipla, Tata Power, Larsen & Toubro, HLL, Infosys and TCS were the other prominent Sensex gainers this week.

Bharti Tele and Maruti dropped over 5.5% each to Rs 385 and Rs 879, respectively. Ranbaxy, Wipro, HDFC Bank and Tata Motors were the other losers among the Sensex scrips.

Reliance Natural Resources zoomed over 82% to Rs 31.20. Kalpatru Power, Ruby Mills, Ansal Housing, Areva, Mysore Cement, Morarjee Real Estate, Bombay Dyeing, Victoria Mills,, Kinetic Engineering and Alchemist finished with sharp gains.

K Sera Sera slumped 20% to Rs 58.50. Shree Ram Multimedia, VisualSoft, Jindal Photo, Impex Ferro, Vakrangee Software, Goodricke, Diana Tea, Warren Tea and Rain Calicining declined 10-18% each.