The Sensex snapped a seven-day, 7.5% rally on Monday as the impact of the drought on India’s economic growth remained a concern. Larsen and Toubro fell the most, in 2 weeks. Metals stocks took a hit after metal prices declined.
On Tuesday, the sensitive index fell again as Prime Minister Manmohan Singh cut growth targets until March 2012 on concerns that drought conditions in half the country may curb farm output. The Planning Commission said the drought could push India’s annual growth to around 7.8% compared to the previous target of 9%. Stocks across sectors took a hit. Maruti Suzuki however, surged to its highest level since it began trading in July 2003 after august sales soared 42%.
The index fell for a third day on Wednesday, on falling metal prices, and as investor confidence waned on the potential for a fast global economic recovery. Sterlite fell after copper prices on the London Metals Exchange dropped. Auto stocks declined and Reliance Communications rose the most in a month after it paid off some of its interest debt ahead of schedule. The Sensex has risen 89% from its March 9th low.
The swings in the markets continued on Thursday with the Sensex closing down again this time on concerns that inflationary pressure could impact the markets negatively. Larsen and Toubro, Mahindra and Mahindra, and Reliance Industries, all took a hit on the news. Sterlite Industries and Tata Steel rose after metal prices gained.
On Friday, the market broke its losing streak, following strong global cues, as the recovery was seen in US index futures. However both the Sensex and the Nifty were down overall for the week.
Top gainers for the week were Mahindra and Mahindra, Hero Honda, Sterlite Industries, Larson and Tourbro, and HDFC.
Top losers included Tata Motors and TCS.
The Auto, Metal, and Capital Goods indices made strong gains for the day. All other sector indices also ended the day in positive territory.