MUMBAI, MAY 18: It was a bad week for Dalal Street, but investors kept their cool and pushed forward. Key benchmark indices soared last week, shrugging off weak industrial production data, high inflation and soaring global crude oil prices.

The fall in the domestic currency against the dollar also failed to impact the market. On the other hand, the falling rupee lifted the shares of IT and export-oriented companies.

The BSE Sensex rose 698 points or 4.17 per cent to 17,434.94 points during the week ended May 16. The S&P CNX Nifty rose 175.10 points or 3.51 per cent to 5157.70 in the same week.

“The market ignored rising prices and weak industrial growth. This is quite unusual. The market still sees earning potential in the ongoing quarter. The Sensex would have fallen by around 800 points, but this did not happen,” said BSE dealer Pawan Dharnidharka.

The wholesale price index (WPI) rose 7.83 per cent in 12 months ended May 3, 2008, higher than the previous week’s annual rise of 7.61 per cent, government data showed.

Inflation data will be closely watched as it remains as a major worry for the domestic growth. High inflation may compel the government to take more fiscal measures to rein in prices in addition to a slew of measures taken recently. It has already indicated the possibility of taking more measures. India’s industrial production growth dropped sharply to 3 per cent in March 2008, slowing from the previous month’s unrevised 8.6 per cent. It was the slowest annual growth since a 2.4 per cent rise in February 2002. “This news should have created nervousness in any market. But not in India,” said an analyst.

The market also ignored the sustained rise in crude oil prices. Crude prices had touched $128 a barrel during the week, putting severe pressure on the rupee and oil companies. But there was no impact on Dalal Street.

The rupee fell to its lowest level since April 2007 to 42.445 per dollar — a fall of 8 per cent in the last three months — on speculation record crude oil prices will widen the nation’s trade and current-account deficits and increase demand for foreign currencies. The currency also weakened after overseas investors further sold local equities.

Foreign institutional investors (FIIs) and mutual funds are not active. FIIs have so far sold shares worth Rs 529.10 crore this month. They sold shares worth Rs 10,887.20 crore in calendar year 2008 — till May 14, 2008. Domestic funds sold shares worth Rs 639.80 this month.

Analysts said the market is likely to be range-bound in the absence of any major domestic trigger, with corporate results nearing an end. The market has reached a stage where liquidity will pull prices up and valuations will keep them under control. The market will have its bit of volatility, but investors seem to be ready.