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Markets ended nearly two per cent lower in the week to January 3, amid concerns over sluggish growth and rising fiscal deficit. The 30-share Sensex ended down 1.6 per cent or 342 points at 20,851, while the 50-share Nifty ended down 1.6 per cent or 103 points at 6,211.
Core eight infrastructure industries registered a muted growth at just 1.7 per cent in November 2013 compared with 5.8 per cent in November 2012. In October 2013, production of these core industries fell 0.6 per cent.
India’s manufacturing sector ended 2013 on a pessimistic note, as growth fell in December against the previous month, according to the widely tracked HSBC Purchasing Managers’ Index (PMI). The PMI was down 50.7 points in December 2013 from 51.3 in the previous month.
However, PMI average for the manufacturing sector stood at 50.5 points in the third (October-December) quarter, slightly higher than 49.4 in the previous quarter ended September 2013.
The fiscal deficit for the first eight months (April-November) stood at nearly 94 per cent of the Budget estimates for 2013-14 clearly showing fiscal strain in the economy.
Globally, China’s manufacturing growth fell to a four-month low to 51 in December, according to the official PMI released by the National Bureau of Statistics.
The BSE Capital Goods Index was the top loser among the sectoral indices during the week under review down nearly five per cent followed by power, oil and gas, bankex, auto and metals.
Capital goods shares witnessed pressure amid subdued manufacturing growth. Among the engineering majors BHEL ended down 4.1 per cent, while Larsen & Toubro closed 6.1 per cent lower. Among other shares in the sector, Siemens eased 5.2 per cent, while Crompton Greaves and ABB India ended down 2.9-3.8 per cent each.
Power shares witnessed profit taking after the Aam Aadmi Party, which offered to sharply reduce the power costs to consumers in Delhi has requested that the books of power distribution companies be audited by the Comptroller and Auditor General. Tata Power dropped 6.2 per cent and Reliance Infrastructure eased four per cent. Among other companies in the sector, NTPC ended down 3.9 per cent and PTC India dropped sharply by 8.1 per cent.
Bank shares witnessed profit taking after a RBI’s Financial Stability Report release said that the risks to the banking sector have increased during the past half-year. As per the report banking stability measures, based on co-movements in banks equity prices, also indicate that the distress dependencies within the banking system have risen during this period.ICICI Bank, SBI, Axis Bank, Canara Bank and HDFC Bank ended down 0.9-3.9 per cent each.
Auto shares remained volatile during the week, witnessing a mixed trend tracking their December sales figures.
Maruti Suzuki registered 4.4 per cent drop in total sales at 90,924 units during December 2013 as against 95,145 units in December 2012. The stock closed 1.3 per cent higher.
Mahindra & Mahindra also registered sales of 39,611 units in December 2013 compared with 45,297 units in the same month last year. The stock ended down 6.7 per cent.
Hero MotoCorp ended up 0.5 per cent. The company registered its highest-ever sales for any calendar year. Sales during calendar year 2013 (January-December) stood at 6.18 million units compared with 6.12 million units sold in calendar year 2012. However, sales in December 2013 were marginally lower at 524,990 units compared with 541,615 units in December 2012. Bajaj Auto slipped 1.9 per cent.
Metal shares remained subdued during the week under review on concerns that sluggish manufacturing growth in China would lead to lower exports. China is the world’s largest consumer of copper and aluminium. Hindalco, Tata Steel, Sesa Sterlite, Jindal Steel ended down 1-3 per cent each.
IT shares bucked the weak trend during the week on improving business environment overseas. TCS gained 2.9 per cent while Wipro and Infosys ended with marginal gains.
Week ahead
The key trigger for the markets in the week ahead will be the third quarter earnings. IT major Infosys will release its numbers on Friday.
Investment trends by foreign institutional investors will be on investors’ radar. Last week, despite the market volatility FIIs have remained net buyers in equities.
The performance of India’s services sector will be released by Markit Economics on Monday.
Further, the government will release November 2013 industrial production data. It may be recalled that industrial production in October 2013 slipped to 1.8 per cent because of slowdown in manufacturing and mining sectors.
Meanwhile, the US Federal Reserve Bank will also release the minutes of the recently held meeting on December 17-18, in which it had gradually started to reduce its monetary stimulus measures.
