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BSE BANKEX-Banking Index
Commentary-for the month of March 2009

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For the week ended March 27, 2009, the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended at 10,048.49 points, with a gain of 1,081.81 points, or 12.06 percent, over the previous week’s close of 8,966.68 points. The BSE Sensex started the week with a positive gap and build on the gains as week progressed. Similarly, the S&P CNX Nifty of the National Stock Exchange (NSE) gained 10.7 percent from its last close to end at 3,109 points.

The BSE midcap index ended 6.27 percent higher than its previous weekly close of 2,934.16 points, while the BSE smallcap index was up 3.97 percent. Short-covering on account of F&O expiry and buoyancy across the global markets lifted the Indian indices. FIIs were heavy buyers this week as risk aversion subsided a little globally. The annual, point-to-point inflation fell to 0.27% in the week ended March 14 from 0.44% in the previous week

The BSE Banking index was the top gainer during the week. The BSE Banking Index was up 19.3%. Banking stocks extended gains after Reserve Bank of India (RBI) on Wednesday 25 March 2009 issued fresh norms for the treatment of provisions for restructured accounts, standard assets, and non-performing assets (NPAs), a move that will help improve the financial health of banks. The major gainers were ICICI Bank, HDFC Bank which soared 19% each to Rs 385 and Rs 997 respectively. State Bank of India also rallied sharply by 18% to close at 1125.35.

For the week ended Mar 20, 2009, Sensex rose 210.07 points, or 2.40%, to 8,966.68. On the other hand, the broad based NSE Nifty rose 87.8 points, or 3.23%, to 2,807.05 in the same period. The BSE Mid-Cap index gained 120.70 points or 4.57% to 2,761.06 and the BSE Small-Cap index advanced 180.32 points or 6.15% to 3,114.38 in the week India`s benchmark wholesale price index (WPI), inflation fell sharply to 0.44% for the week ended Mar. 7, 2009 as compared to 2.43% a week ago. It was at 7.78% during the corresponding week the previous year.

Buying was seen all round as all sectoral indices ended in the green. The Bankex gained a little over 2%. The Bankex ended up 113.54 points or 2.86 per cent. Banking shares gained on hopes that lower interest rates may boost lending growth. The major gainers were ICICI Bank, which closed up 14.63% at Rs 322.90. HDFC Bank and State Bank of India closed with minor gains.

For the week ended Mar 13, 2009, BSE Sensex ended trade at 8,756.61 points, a gain of 430.79 points or 5.17 percent from its previous weekly close. The broader S&P CNX Nifty index of the National Stock Exchange (NSE) shut shop at 2,719 points, about 3.8 percent higher than last week’s close. Broader market indices like the BSE midcap index gained 54.06 points or 2.09 percent while the BSE smallcap index was up 22.23 points or 0.77 percent.

Banking sector saw a short covering following a slide last week. FIIs were the major sellers in banking stocks as they sold most of their holdings in banking stocks last week and thus lots of short positions were created in the banking stocks.Therefore BSE Bankex outperformed the Sensex in the week. The Bankex ended up 6.34%. The major gainers were ICICI Bank, which closed up 8.6% at Rs 308.7, with volume of 8,287,670 shares. The stock has risen over 13% from the closing price on March 9. It was up 8.10% on March 12, 2009. HDFC Bank gained Rs 33.45 to close at Rs 834.55. Axis Bank also gained Rs 35.3 to close at Rs 330.55.

For the week ended Mar 6, 2009, Sensex lost 565.79 points (6.36%) to settle at 8,325.82, while the broad based NSE Nifty sank 143.5 points (5.19%) at 2,620.15 during the same period. During the week, mid-cap stocks declined 171.99 points at 2,586.30. The small-cap shares dropped 194.28 points (6.25%) at 2,911.73. The easing inflation, which dropped by 33 basis points to 3.03%, and administration’s stimulus of cut in interest rate by 50 basis points failed to boost investor reaction in the markets.

As selling was broad based, all the sectoral indices ended in the red last week. The BSE Bankex was the worst performing indices during the week, which lost 503.01 points or 11.86% to close at 3737.09 points on fears of rising loan defaults due to the deepening global recession. The major losers were ICICI Bank, which lost a staggering Rs 58.80 or 17.92% to close at Rs 269.30 and HDFC Bank, which lost Rs 84, or 9.49% to close at Rs 801. State Bank of India, also lost on significant ground Rs 86.25 or 8.39% to close at Rs 940.85.

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