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Radical end to a dramatic week

Jan 10, 2009

The arrest of Mr. Ramalinga Raju last night marked the end of a distressing week for Indian stock markets. The Satyam scandal wore heavy on the markets during the latter part of the holiday-shortened week. Not only India, but most equity markets around the world had their fair share of negative news to keep them void of any gains.

As we enter the earnings season, most seem to be apprehensive that actual numbers and forecasts are likely to be even worse than expected. In terms of India, the obscenity of the fraud at Satyam rocked investor confidence, and became a big drag on the markets' performance this week. India was the biggest loser among key Asian markets, falling almost 5.5%.

This was followed by Hong Kong where some large companies forecasted losses and a missing of quarterly targets. Korea was the lone gainer in Asia, led by the country's central bank cutting interest rates to a record low, saying the economy is deteriorating 'rapidly'. Stocks in the US declined the most (4.8%) amongst world markets on the back of an increase in unemployment rate to nearly 16-year high.

A report that showed that 524,000 jobs were lost in the US in December 2008 alongwith other bleak economic data, took its toll on oil prices during the week. Oil dropped about 11% with the widespread anticipation of a deepening recession consequently leading to a further fall in demand for crude. The negative sentiment was strong enough to shadow signs that OPEC is fulfilling supply cuts announced last month, as also the ongoing Middle East political tension.

Gold and silver thrived on speculation that the dollar will slide as the recession deepens, boosting the appeal of precious metals as an alternative investment. A spike in inflation seems to be at the top of every one's mind, as much of the US government's heavy expenditures will have to be funded with newly printed dollars.

Source: Yahoo FinanceSource: Yahoo Finance

Source: SEBISource: BSE

Source: BSESource: BSE

Movers and shakers during the week
Company2-Jan-099-Jan-09Change52-wk High/LowChange from 52-wk High
Top gainers during the week (BSE-A Group)
Bajaj Finserv158 179 13.6%NANA
Guj NRE Coke27 31 13.1%145 / 21-78.9%
Grasim1,212 1,361 12.3%3,524 / 831-61.4%
India Cements103 115 11.1%295 / 69-61.2%
Container Corp.675 743 10.0%967 / 540-23.2%
Top losers during the week (BSE-A Group)
Satyam178 24 -86.6%544 / 12-95.6%
Lanco Infratech.167 110 -34.0%839 / 83 -86.9%
Nagarjuna Const. 85 59 -30.2%354 / 41-83.3%
India Infoline 68 48 -29.4%379 / 34-87.3%
DLF301 218 -27.6%1,225 / 145-82.2%
Source: Equitymaster

Over and above everything else, the week was marked by skepticism and cynicism amongst investors about the verity of the managements that head their companies. Investors became more alert then ever before as to who is at the helm of companies they have invested their money in.


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