The surprising event was that even though the stocks (HDB, INFY) that reported moved decently, they had a more pronounced effect on their peers, like Wipro (WIT) and Tata Consultancy Services, both up 4.8 % and ICICI Bank (IBN), up 6.8 %, which actually hit an upper price circuit in trading on Friday. Other star performers were MTNL (MTE), the telecom major, up 10 % and Jet Airways, up another 6.7 %,which continued its cruise upwards on the back of falling oil prices.

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WIT/INFY 1-wk comparison chart


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IBN/HDB 1-wk comparison chart

The rupee's recent strength and its negative impact on INFY's earnings, which are mostly export-driven, have been incessantly flaunted by the bears and skeptics alike. This and a host of other reasons have caused INFY to give up as much as 6.76 % from its highs of last week. Most traders attribute the selling to booking of profits in the stock ahead of earnings, as it has risen by more than 87 % from its May 2006 lows,when the whole market took a beating.

BSE SENSEX vs INFOSYS FOR THE LAST WEEK

These are very similar to conditions that caused the nasty sell off in May 2006, the painful memories of which are still branded on bull backsides. Another fear factor to keep a watch on is the dramatic sell off in the commodity space. The last time this happened was in May 2006, especially in gold, and it neatly fit into our little market event on this side of the globe. This may not be an accurate indicator this time around, as the correlation has not been that high in the last couple of months, but this chart is still worth looking at.

BSE Sensex/StreetTracks Gold Trust ETF (GLD) Comparison chart

The ISM numbers gave traders additional comfort, but things began to fall apart as the market's notoriously short attention span turned next to focusing on the Fed Minutes that showed that the members were still concerned about inflation on the rise. Additional worry lines grew on trader foreheads as the august crowd at the Fed wrung their hands in concern at slowing economic activity as well. Yikes! That's all we need right now - inflation and growth worries.

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BSE Sensex 1-yr chart

How's that for volatility? BSE Sensex peak to valley drop of 30% in May 2006.

But, all said and done, the chart above is the reflection of the superb growth story that is unfolding in India, which is finding favor with plenty of investors around the world, as evidenced by the market's tendency to claw its way back from devastating drops. After all, markets never go up in a straight line, right?

After starting off the week with a bang, the major indices sobered up as the Thai market fiasco spilled over into Indian markets and harsh memories of 1997 unnerved FII (Foreign Institutional Investors) players. Even though the Thai government, in all its wisdom, reversed some of its directives, the last thing that fund managers wanted on their watch was another Asian contagion circus.

Even as the experts in the media stressed that this time it was different, the FIIs decided to err on the side of caution and sold heavily during the week, about Rs 10 billion worth.The domestic mutual funds bought into this selling, but it was not enough to stem the outflow. After all, which fund manager wants to see his fund's performance take a knock in the last week of the year and diminish the holiday cheer and the fat bonus paycheck?

But the two causes that stand out with some respectability are the Reserve Bank of India's decision to raise the Cash Reserve Ratio [CRR] by 50 bps at one go, and the Index of Industrial Production [IIP] unexpected October dip to 6.2 % for year on year growth, a total shocker compared to the feel good figure of 11.4 % for the previous month.