The indices may try to rally next week, but upmoves will be weak and downmoves will be strong

The market snapped its four-week winning streak and settled lower on growth concerns and nervousness ahead of the Reserve Bank of India’s (RBI) quarterly policy review, due on 30^th July.

The Sensex lost 402 points (1.99%) to close the week at 19,748 and the Nifty settled at 5,886, down 143 points (2.37%). 

The market settled marginally in the positive on Monday, after engineering major L&T’s quarterly number failed to meet market estimates. The benchmarks settled higher on Tuesday on support from fast moving consumer goods, power and realty sectors. However, on Tuesday night the Reserve Bank announced measures to curb liquidity in order to strengthen the rupee. This immediately led to a break in the upmove that had started on June 26^th. On Wednesday, the indices fell sharply.

The market fell further on Thursday, the day of futures and options expiry when ITC, one of the strongest stocks in the market reported June quarter results that failed to meet market expectations. The indices closed further down on Friday on selling pressure in rate-sensitive sectors like metal, realty, PSU and banking after RBI announced further tightening measures.

BSE IT (up 2%) and BSE TecK (up 2%) were the top sectoral gainers in the week while BSE Capital goods (down 10%) and BSE Metal (down 7%) were the top losers.

The major gainers on the Sensex were Hero MotoCorp (5%), Sun Pharma (3%), Bajaj Auto (3%), Infosys (2%) and Bharti Airtel (2%). The leading losers on the index were Larsen & Toubro (13%), Jindal Steel & Power (10%), Tata Steel (9%), Hindalco Industries (9%) and BHEL (9%).

The week saw signs of euro zone recovery contrasted with weaker Chinese PMI data. China's manufacturing weakened further in July, signalling the worst of the nation's slowdown has yet to be reached, according to a preliminary survey of purchasing managers. The reading of 47.7 for an index released today by HSBC Holdings Plc and Markit Economics was less than estimated.

German and French PMI surveys both beat expectations. Overall, the business polls indicated that the euro zone economy was likely to grow in the current quarter.

UK economic growth accelerated in the second quarter as all main industries showed expansion for the first time in three years, indicating Britain’s recovery is gaining traction. Gross domestic product increased 0.6 percent from the first quarter, when it rose 0.3 percent, the Office for National Statistics said in London today. US Futures were also trading deeply in the red.

On Friday, the rupee rose to a five-week high as the Reserve Bank of India's aggressive defence of the currency showed some signs of success, but at the cost of equity markets.