Weekly Report: Markets decline as global bourses weigh

Markets slipped this week as global concerns weighed on investor sentiments in India. The Sensex slipped 1.3% or 242 points this week to end at 17,563. Nifty shed 1.4% or 77 points to 5,284.

Markets could not extends last week's strong rally and slipped from teh week's high of 17,813 on Monday amidst weakness in the global economy. The Sensex consolidated further on Tuesday as weakness persisted in the European markets. The downward movement continued on Wednesday as Doubts arose on the viability of the Greece-debt deal. The Sensex touched a low of 17,278on Thursday but managed to recover marginally from there on Friday.

According to reports, the French President admitted that the world had been taken by surprise by Greece and the decision by Prime Minister Papandreou to hold a referendum, but he insisted that despite the vote announcement, Greece must continue with the bailout plan. On Thursday, markets reversed trends on fresh hopes the EU bailout will be passed by the Greek Parliament. Things turned around after the Greece ruling party withdrew support and asked the Prime Minister to resign, thereby raising hopes that a referendum to the latest EU bailout package may not be needed.

In other news, according to government data released today, food inflation rose to 12.21% during the week ended October 22, with expensive vegetables, pulses, fruits and milk, putting more burden on the common man. Food inflation, as measured by the Wholesale Price Index (WPI), stood at 11.43% in the previous week. Finance Minister Pranab Mukherjee expressed grave concern over rising food inflation, even as he attributed the latest spike in prices to increased demand during the festive season.

Meanwhile, India's service sector contracted for a second straight month in October, as new business grew at its weakest pace since May 2009 dragged by sagging global demand and tight monetary policy. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, slumped to 49.1 in October, its lowest reading in two-and-a-half years and below the 50-mark which separates growth from contraction. It was at 49.8 in September.

Also, the bail pleas of DMK chief Karunanidhi's daughter Kanimozhi has been rejected. Sharad Kumar, Rajeev Agarwal, Karim Morani and Asif Balwa's bail plea have been dismissed. The Central Bureau of Investigation (CBI) did not argue in the court against the rejection of the bail pleas. The 2G trial has been scheduled to start on November 11.

A government official said on Friday that Pakistan has backtracked after granting the Most Favoured Nation status to India in trade recently. This is likely to impact trade relations negatively between the two nations.

BSE auto index slipped 3.3% to 9,248 and was the biggest loser among sectoral indices. With the exception of a few, most automobile companies reported weak sales in October. Rising cost of ownership and high interest rates have cooled down sales of passenger cars and commercial vehicles. According to Angel Broking, Hero MotoCorp, Bajaj Auto, Maruti Suzuki and Tata Motors posted volume numbers that were not in tandem with expectations.

BSE metal index shed 2.4%, followed by the oil & gas index. However, the FMCG index gained 0.7% through the week to end at 4,184.

Most of the Sensex stocks also ended in red barring a few. Hindustan Unilever soared 8.5% to Rs 379. The FMCG major posted a net profit of Rs 689 crore for the quarter ended September 30, 2011 as compared to Rs 566 crore in the year ago period.

SBI from the banking space added 3%, followed by BHEL and Tata Power.

Bharti Airtel advanced 1.5% to Rs 103 after announcing Q2 numbers. The company reported a bigger-than-expected 38.17% fall in quarterly profit bringing its consolidated net profit down to Rs 1,027 crore ($210 million), hit by higher interest costs and foreign exchange losses worth Rs 239 crore. Bharti Airtel is looking to spend $1.4 to $1.5 billion on its Africa operations in the current fiscal to end-March, a company executive said on Friday.

Wipro slipped 0.3% to Rs 372 after gaining smartly in opening trades. The company reported 1% year-on-year (y-o-y) growth in net profit to Rs 1,301 crore for the quarter ended September 2011 helped by a weaker rupee and rise in spending on outsourcing by overseas clients. Analysts expected a net profit of Rs 1,294 crore from the India’s third largest software services exporter in the recently concluded quarter.

Mahindra & Mahindra posted 20% rise in sales at 41,506 units in October. The stock dropped 4% to Rs 835. Among other auto stocks, Maruti Suzuki reported a 53% decline in its total sales for the month of October. Maruti sold 55,595 units in October 2011 as compared to 118,908 units in October 2010. The stock ended flat at Rs 1,123.

Sun Pharma was up marginally at Rs 512 after getting approval from the US health regulator to market generic Diltiazem HCl extended-release capsules used for treating hypertension and angina in the American market.