Market nudged higher last week tracking recovery in Asian markets on speculation that the US Federal Reserve will cut benchmark rates sooner rather than later. But the domestic bourses underperformed its Asian peers due to fluid political situation in New Delhi, with prospects of mid-term polls looming large. World stock markets had fallen sharply in recent weeks as problems in the risky US subprime mortgage sector spread to other markets.

The 30-share BSE Sensex rose 283.35 points or 2% to settle at 14,424.87 in the week ended Friday, 24 August 2007. The S&P CNX Nifty rose 82.10 points or 1.99% to settle at 4,190.15 in the week.

The market surged on Monday, 20 August 2007, tracking recovery in Asian markets which were boosted by Federal Reserve' 50 basis-point cut in discount rate at which it lends to banks, on Friday 17 August 2007.

However, the Indian market underperformed its Asian peers on that day due to political concerns. Left parties asserted on Monday, 20 August 2007, that a freeze on the forthcoming negotiations on India-specific safeguards at the International Atomic Energy Agency (IAEA) was a prerequisite for accepting the government’s suggestion of setting up a panel to look into Left’s concerns over the Indo-US nuclear deal.

Left parties had warned the government on Saturday, 18 August 2007, of serious consequences if it pursues with a nuclear deal with the United States. The four Communist parties have 60 members of parliament (MPs) in the 545-member lower house of parliament. Prime Minister Manmohan Singh's government could fall or be reduced to a minority if the Left withdraws support.

Political uncertainty spooked the market on Tuesday, 21 August 2007, as Sensex plunged 438 points in a broad-based sell-off. A host of small-cap and mid-cap stocks tumbled.

The market bounced back on Wednesday, 22 August 2007, as mutual funds mopped up battered shares amid market talks that left parties may not withdraw support to the government. Firm global markets also supported domestic bourses.

Volatility gripped the market on Thursday, 23 August 2007. Sensex lost 84.68 points or 0.59% to settle at 14,163.98. The market lost ground despite firm global bourses.

The market bounced back again on Friday, 24 August 2007, as fears of immediate elections eased after India's biggest communist party, Communists Party of India (Marxists), or CPM, said after trading hours on Thursday, 23 August 2007, it does not want to pull down the government over a nuclear deal with the United States.

Though CPM softened its stand on withdrawing support to the ruling coalition government at the Centre, it reiterated the government should not go ahead with negotiations with the International Atomic Energy Agency and Nuclear Suppliers Group over a nuclear deal with the US.

Cement shares edged up on Thursday, 23 August 2007, following Switzerland's Holcim open offer to acquire additional 20% stake in North India’s largest cement maker Ambuja Cements. Holcim said on Thursday it would launch a public takeover offer for another 20% of the share capital of Ambuja Cements in a bid worth around $1.12 billion. The open offer will be made at Rs 154 per share, representing a 20% premium over the average price of the shares for the last two weeks, Holcim said.

Concerns of possible US economic slowdown due to sub-prime defaults weighed on IT shares which derive a lion’s shares of revenue from exports to US.

Bharti Airtel surged on reports it plans to double its telecom towers to 80,000 by end of March 2008.

Reliance Industries (RIL) witnessed alternate bouts of buying and selling. The Empowered Group of Ministers, formed to look into pricing and utilisation of natural gas produced from new fields like the KG-D6 of RIL, is likely to hold its first meeting on 27 August 2007.

Meanwhile, Uttar Pradesh chief minister Mayawati on Thursday, 23 August 2007, ordered the closure of 10 new supermarkets run by RIL following protests by traders and some political activists against the opening of the Reliance Fresh stores. Mayawati said the state government has appointed a high-level committee to review the whole affair. Until the committee gives a green signal, Reliance Fresh stores will remain shut

Bhel came off lower level after the company on Tuesday, 21 August 2007, won orders worth Rs 6500 crore to set up power project units. L&T, too, came off lower level as investors mopped the counter due to its strong order book position.

Refex Refrigerants ended at Rs 62 on BSE on Monday, 20 August 2007, a discount of 4.61% over the IPO price of Rs 65. The scrip debuted at Rs 69.10. Refex Refrigerants refills non-ozone depleting refrigerant gases, or hydro fluorocarbons (HFCs).

Central Bank of India settled at Rs 115.40 on BSE on Tuesday, 21 August 2007, a premium of 13.13% over the IPO price of Rs 102. The stock debuted at Rs 130.10 at a premium of 27.54% over the IPO price of Rs 102. The share price touched a high of Rs 133.25 and a low of Rs 114.

SEL Manufacturing Company ended at Rs 142.80 on BSE on Tuesday, 21 August 2007, a premium of 58.67% over the IPO price of Rs 90. SEL Manufacturing had debuted at Rs 87.90, a discount of 2.33% over the IPO price. SEL Manufacturing Company manufactures and exports knitted garments, fabrics and combed and carded yarn.

Asian Granito India settled at Rs 94.75 on BSE on Thursday, 23 August 2007, a discount of 2.3% over the IPO price of Rs 97. The stock debuted at Rs 100.15, a premium of 3.2% over the IPO price of Rs 97. Asian Granito India manufactures vitrified tiles.

Power Grid Corporation of India, on Wednesday 23 August 2007, filed the draft prospectus for its initial public offer (IPO) with Securities & Exchange Board of India (Sebi). The public offer involves issuing 10% fresh equity while the government will divest 5% stake simultaneously. The company is expected to raise about Rs 580 crore from the IPO.

Securities and Exchange Board of India (Sebi) said on Wednesday, 22 August 2007, it had barred D-Lind (India) from trading in securities for one month citing false and misleading information by the company on shares buybacks.

BSE said on Monday, 20 August 2007, it has decided to shift a total of 143 stocks to trade-to-trade segment with effect from Friday, 24 August 2007. The stocks transferred to trade-to-trade segment include Aurangabad Paper Mills, Bharat Fertilizer Industries, Eltrol, G.P. Electronics, G.R.Cables, Harig Crankshafts, HOV Services, Kilburn Engineering, LML, Nath Pulp & Paper Mills, SIEL, Trishakti Electronics & Industries, Bajaj Hindustan Sugar & Industries, Ion Exchange (India), among others.

Sebi said on Wednesday, 22 August 2007, it is considering a waiver of the entry load for direct applications received by asset management companies. Equity mutual funds charge entry load on one-time investments made directly or through distributors.

The government is committed to developing its nuclear energy capability and other sources of power as the country’s its oil bill will impose an unbearable burden as growth continues, Prime Minister Manmohan Singh's said on Monday, 20 August 2007. Singh urged political parties to appreciate the vital interest of pursuing a sound energy security strategy.

India's wholesale price index rose 4.10% in the 12 months to 11 August 2007, slightly up from the previous week's 4.05%, due to higher food and manufactured product prices, government data showed on Friday, 24 August 2007.