‘One good thing that is happening of late is that the government is making some bold moves and asking banks to start lending again. It will definitely have an impact on the markets acting as a confidence booster in a crisis-ridden market,’ said Jagannadham Thunuguntla, head of the capital markets arm and director of India’s fourth largest share brokerage firm, the Delhi-based SMC Group.

1. Reduced lending rates, falling inflation prop equities market
(Weekly Roundup)
Mumbai | December 20, 2008 4:05:07 PM IST
Mumbai, Dec 20 (IANS) A probable second round of financial stimulus, coupled with banks
cutting lending rates and falling inflation figures had a rub-off effect during the week on Indian
equity markets with a key index Friday closing 4.1 percent higher than last weekend’s close.
The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) hit an intra-week
high of 10,188.54 but closed at 10,099 points Friday, 408.93 points higher than the Dec 12 close
of 9,690.07.
Similarly, the broader-based 50-share S&P CNX Nifty of the National Stock Exchange (NSE) hit
an intra-week high of 3,106.80. However, its gains tapered ending Friday at 3,077.5 points,
155.75 points higher than compared to last week’s close of 2,921.75 points.
The BSE midcap index ended the weekly trade Friday at 3,204.56 points, up 154.08 points from
its previous weekly close Dec 12 at 3,050.48 points. The BSE smallcap index finished the week
Friday at 3,711.95 points, up 180.99 points from its Dec 12 close of 3,530.96 points.
The markets opened higher this week gaining steadily for most part of the week except
Wednesday. Markets surged owing to some good news like falling inflation and expectations of
a second stimulus package.
‘One good thing that is happening of late is that the government is making some bold moves and
asking banks to start lending again. It will definitely have an impact on the markets acting as a
confidence booster in a crisis-ridden market,’ said Jagannadham Thunuguntla, head of the
capital markets arm and director of India’s fourth largest share brokerage firm, the Delhi-based
SMC Group.
The Sensex finished Monday at 9,832.39 points, up 142.32 points or 1.47 percent while the Nifty
closed 2,981.20 points, up 59.85 points or 2.05 percent from its previous close.
Tuesday, which saw dull trading for most sessions, witnessed a late rally with the Sensex
shooting up 144.59 points to end the day at 9,977 points. The Nifty also closed 59.85 points
higher at 2,981.2.
Markets took a beating Wednesday, triggered by Satyam’s failed bid to acquire its promoter
group companies, Maytas Infra and Maytas Properties, and profit booking by investors. Sensex
closed 261.69 points lower as compared to Tuesday to rule at 9,715.29 points.

2. The Nifty too lost 87.4 odd points to close at 2,954.35 points.
The Sensex gained highest in the week Thursday as it rose 361.14 points or 3.72 percent over its
previous close to rule at 10,076.43 points. Nifty also shot up to close at 3,060.75 as the
government announced that the rate of inflation had fallen to a nine-month low of 6.48 percent.
Friday’s rise in the key indices was more of a rub-off effect of the overall investor confidence
amid rumours that government would soon announce a second stimulus package.
The Sensex managed to close above the psychological 10,000-mark at 10,099.91 points, 23.48
points or 0.23 percent higher than Thursday’s close, while the Nifty also closed with gains of
16.75 points or 0.55 percent to end the day’s trade at 3077.50 points.
‘We will have the occasional setback during this bull run but that is natural in such
circumstances as investors look to book profits at regular intervals,’ added Thunuguntla.
This, he argued, was because investors were still not sure about how long and sustainable the
rally would turn out to be and were looking for opportunities to book gains rather than be
invested in the long-term.