After rising for several weeks, the Sensex tumbled nearly 4.7 per cent and closed below the psychologically important mark of 15,000. It ended last week at 14,522 points. The Sensex is currently trading at a trailing price to earnings ratio of 19.21.

Foreign institutional investors (FII) turned net sellers last week, accounting for a net outflow of Rs 156 crore from the Indian equity markets.

According to Kishor Ostwal, chairman and managing director, CNI Research, “There were rumours in the market that the Securities and Exchange Board of India (SEBI) is coming up with a guideline that would stipulate a lock-in period for investments made by FIIs and qualified institutional buyers (QIB). This pulled the market down. These rumours died down only after the actual guidelines came in, and they turned out to be regarding anchor investors for initial public offers.”

Sectoral performance was also bleak last week. The major gainers were Banks and Information Technology: they rose marginally by 0.9 per cent and 0.7 per cent respectively during the week. “Banks are expecting a rate cut now that wholesale price inflation has entered negative zone,” says Ostwal. The sectors that were heavily battered during the week were Realty and Oil and Gas: they declined significantly by around 10.2 per cent and 10.7 per cent respectively. Explains Ostwal: “The realty sector took a beating due to over-ownership of realty stocks.”

Last week the wholesale price index based inflation went sub-zero for the first time in three decades. Crude oil prices slipped 3.3 per cent during the week. Crude is currently trading at $68.3 per barrel. The price of the yellow metal declined nearly 0.3 per cent during the week. Gold is currently trading at Rs 14,565 per 10 grams.