The markets soared high during the first few months of this year mainly due to the boom in the IT stocks. A correction was long overdue and it started off in the month of April with the NASDAQ crash. The last two months have seen the lowest of the tech stocks on the NASDAQ, influenced by the apprehensions regarding US interest rates. Needless to say, the Nasdaq had a trickle down effect on the domestic bourses pulling down the Sensex even below 4000 and leaving the investors panicky.

The last two weeks have given a new twist to the situation. While only tech stocks were in the limelight so far, revived interest was seen in the old economy stocks last week pushing behind the new economy stocks. Well, this shift was also primarily a follow up of the global trend. The selling pressure from FIIs was clear across all counters but more prominent on the new economy stocks. Almost all the leading tech, media and telecom (TMT) stocks closed lower on Monday, 22nd of May. Satyam, Infosys, Zee Telefilms and ACC hit the 8 percent lower limit of the circuit breaker. L&T also hit the 12 percent lower limit of the circuit breaker. On the other hand, old economy stocks like MTNL, Gujarat Ambuja Cement, Nestle and ITC managed to close positive.

Tuesday was no different, but the fall was less steep. Software, media, telecom, pharma and FMCG recorded lower closing. The next day too, the lowering of NASDAQ and Dow Jones had its effect on the Indian markets. The FII selling pressure was high on the New Economy stocks, which closed lower by the end of the day. But the case was different for the old economy stocks, which touched upper limits of the circuit breakers on account of institutional and speculative buying. BSES, ACC, L&T, GACL, Grasim, Mahindra & Mahindra, MTNL, BHEL, Tisco, Reliance Petroleum, Castrol, BHEL, Tisco, Bajaj Auto and ICICI were the contributors to the recovery of the Sensex.

The open offer of RIL picking up 20 percent stake in BSES had its impact on the share price of BSES, which touched the upper limit of the circuit breaker on Wednesday. The cement industry has been in the limelight for quite sometime on account of the mergers and acquisitions taking place, what with the prediction of good monsoons adding to the recovery of the cement stocks. Refinery stocks like BPCL, IOC, Madras and Cochin Refineries were also up.

NASDAQ and Dow Jones closed with a gain on Wednesday, which had its impact on the Indian market on Thursday. The old economy stocks picked up with the announcement of good monsoons. The tech stocks remained subdued. M&M, HPCL, ICICI, ITC, Grasim, GACL, L&T and ACC were among those that touched the upper limit of the circuit breaker. Software, media and telecom remained weak.

So by the end of last week, the investors were left with the understanding that its time to invest in the economy oriented sectors like cement, pharma and FMCG and the party time for tech stocks seemed all but over. The week next was expected to open with the same sentiment with the old economy stocks gaining further momentum. And so was the case. But the new economy stocks too saw some institutional buying and staged a recovery. The trend was however mixed. Satyam suffered on account of the dubious share allotment news to the director of Satyam Enterprise Solutions. Over all, among the new economy stocks, media and telecom remained weak and the software scrips gained.

The real turnaround in investment came on Tuesday, when the new economy stocks gained momentum over the old economy stocks, leaving the investors confused. The rupee depreciation had a positive impact on the tech stocks, which revived the FII interest in these stocks. Investors booked profit in the cement sector, which saw a decline in the share prices. Telco recorded a fall on account of poor results. The pharma sector witnessed heavy buying.

On Wednesday too, the tech rally continued with the FIIs continuing to buy tech stocks. The media stocks were up with Zee Telefilms touching the 8 percent upper limit of the circuit breaker. The old economy stocks saw profit booking, which affected the prices. Cement stocks were down while pharma and FMCG remained steady.

Thursday saw a reversal of trend with the new economy stocks back in the red. IT, media and telecom stocks closed lower and so were the FMCG and cement stocks. Only the pharma stocks saw a rise with Glaxo, Ranbaxy and Cipla closing higher than the previous close.

On the settlement day of the week, the new as well as the old economy stocks were up, which gave a boost to the markets. This was also a reaction to the NASDAQ picking up. The bullish sentiment was sustained all through the day, and the Sensex closed 129 points higher than the previous close.

So that’s the story for the last two weeks. First, the tech stocks were down and old economy was up. Then old economy was down and tech stocks were up. Now, both the stocks are up. So, what next? Well, the NASDAQ on Friday was 231 points up on the announcement by the US Government that the new jobs and wages grew less than expected in May. This is expected to have an impact on the domestic market when it opens for trading on Monday. Moreover, the expectation of further depreciation of the rupee is likely to keep the FII interest in tech stocks sustained at least for some time now. The Dow Jones was also 142 points up on Friday, giving a hope of the same sentiment to be carried over to the old economy stocks on the Indian bourses on Monday.