 "Weekly: Indices tumble on FII sell-off; down over 2.4%")
Markets shrugged off positive data and slumped due to weakness in global equities and aggressive selling by Foreign institutional investors (FIIs) in the week ended Friday, 1 August 2014. Investors remained cautious as they feared US Federal Reserve may hike interest rates.
The market registered a decline in three out of the four trading sessions gone by.
For week, the S&P BSE Sensex slipped 2.47%, or 645.9 points, to end at 25,480.84 levels while the CNX Nifty lost 2.41%, or 187.85 points, to end at 7,602.60. Both the benchmark share indices ended at the lowest closing level since 15 July 2014.
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Furthermore, the broader markets also edged lower but outperformed benchmark indices. The BSE Mid-cap index dipped 0.7% while the Small-cap index ended nearly 1.5% lower.
The latest monthly job report revealed that the US economy added some 209,000 new jobs in the month of July. Lower-than-expected additions may erase FII’s concerns as the US Fed Reserve has committed to keep the interest low till wages rise and jobs rate fall.
As per provisional data from stock exchanges, on Friday and Thursday, FIIs sold shares worth about Rs 2,600 crore. The FIIs have about Rs 73,000 crore of investment in the Indian markets.
Economy
Manufacturing activities in India this July rose the most in 17 months on increased orders, according to the HSBC Purchasing Managers' Index (PMI).
Also, the official PMI issued by the Chinese government climbed to a 27-month high of 51.7 in July, beating forecasts for 51.4.
Meanwhile, US Secretary of State John Kerry told Prime Minister Narendra Modi on Friday that India's refusal to sign a global trade deal sent the wrong signal, and he urged New Delhi to work to resolve the row as soon as possible.
Sectors and stocks
Among the sectoral indices, BSE capital goods index plunged nearly 8% followed by Oil & Gas, Metal, Power, Realty, Consumer Durables, IT, Auto and Bankex indices, all slipping between 1-3% each. FMCG index dipped over 0.5% while Heathcare ended flat with a positive bias.
Capital Goods major, L&T tanked over 11% during the week after reporting consolidated net profit of Rs 967 crore for the quarter ended June 2014 (Q1), mainly on account of a one-time gain of Rs 249 crore on disinvestments and stake sale in one of its project.
Among stocks of power companies, Tata Power and NTPC shed between 5-6%.
Tata Motors slumped nearly 5% after the company reported 26.93% decline in total sales last month at 1,49,597 units, as against 2,04,744 units in July 2013. Furthermore, reports that Jaguar Land Rover (JLR) has reduced its prices on three of its high end models in response to pricing and anti-monopoly investigation in China also caused the scrip to end lower.
Similarly, M&M slipped nearly 3% after the automaker major reported 4.12% decline in total sales at 35,567 units in July.
Meanwhile, Maruti Suzuki gained over 3% after the company reported 19.9% rise in domestic sales at 90,093 units in July as against 75,145 units in the same month last year. Hero MotoCorp edged up nearly 1% after it reported a 9% rise in sales to 5.29 lakh units in July 2014 over July 2013.
Metal stocks ended lower, with Coal India, Sesa Sterlite, Hindalco and Tata Steel, all down between 1.4-5%.
Index heavyweight RIL plunged over 4% after the oil and gas major said it is open to offloading up to 30% stake in its telecom venture, Reliance Jio, to a global strategic partner - a move to unlock value. But the stake sale will be done only after the telecom company has acquired a sizeable customer base.
Among other oil & gas companies, ONGC tumbled over 3.5% while GAIL ended dipped over 1.5%.
In contrast, Telecom major Bharti Airtel rallied 7% after reporting 61% year-on-year jump in consolidated net profit at Rs 1,108 crore for Q1, backed by a 74% rise in mobile data revenue. It has crossed 300 million customers mark across its mobile, fixed line, DSL and DTH services, the company said in a statement on Monday, 28th July 2014.
IT stocks also ended in the red as sector majors like Wipro and TCS ended between 2-3.5% lower while Infosys slipped 0.36%.
Stocks of SBI, Axis bank and HDFC twins ended down by over 2% while ICICI bank ended flat with a positive note.
ITC dipped over 2% on profit taking. The stock had gained 1.4% on 30th July 2014 after its cigarette business’ revenues grew 18.8% year-on-year to Rs 4,201 crore and Ebit (earnings before interest and tax) margin went up 142 basis points to 64.8% for Q1. The country’s largest cigarette maker reported a better-than-expected 25% yoy rise in quarterly sales at Rs 9,160 crore during the quarter under review against Rs 7,339 crore in June 2013. The sales growth during the quarter was highest since March 2010 quarter.
FMCG major HUL surged over 5%. The company reported a 3.68% increase in net profit at Rs 1,057 crore for the quarter ended June 30, 2014. It was Rs 1,020 crore in the same period a year ago.
Week Ahead:
· Reserve Bank of India policy is due on Tuesday
· Quarter results: Hero MotoCorp, M&M, State Bank of India, Power Grid Corporation of India, Apollo Tyre and Jubliant Food Works