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Benchmark indices snapped their four-week winning streak and posted their worst weekly performance in two months, amid weak second quarter earnings by blue chip firms. Investor sentiment was also dampened after the US Fed meet rekindled hopes of an interest rate hike in December.
In the week leading up to October 30, the 30-share BSE Sensex ended down 814 points, or 2.96 per cent, at 26,657. The 50-share Nifty ended lower by 230 points, or 2.77 per cent, to close at 8,066, its worst performance since the week ended September 4.
Selling pressure was also seen in broader markets, with the BSE Mid-cap down 1.5 per cent and the small-cap losing 1.8 per cent during the week.
“Markets ended on a weak note, giving up about three per cent over the week. This was despite the US Fed not raising rates and China cutting rates/CRR to support the economy. Markets were likely disappointed by the results of a few banks/capital goods/other companies, which failed to meet expectations. The focal points for the markets will be the remaining quarterly results and the outcome of Bihar elections. A win for the National Democratic Alliance in the Bihar elections will be a positive for the markets. Post that, markets will focus on Parliament proceedings, wherein, important legislations like the goods and services tax (GST) Bill are expected to be taken up,” added Dipen Shah, head of Private Client Group Research, Kotak Securities.
Stock trends & earnings review
Sectors such as capital goods, banks, FMCG and realty plunged between three to four per cent. The BSE Consumer Durables index was the only sector that ended in the positive zone, albeit marginally .
Among the 30 Sensex shares, 20 declined and the remaining shares rose.
Axis Bank was the biggest Sensex loser last week. The stock fell almost 10 per cent. The bank reported a 19 per cent rise in net profit to Rs 1,916 crore for the July-September quarter, as against Rs 1,610 crore in the same quarter in the previous financial year. According to analysts, this fall in the share price was triggered after the bank classified two power sector exposures worth Rs 1,820 crore as non-performing assets and sold them to asset restructuring companies (ARC).
Lupin was the second largest loser during the week, down over seven per cent. The company reported a 35 per cent fall in its net profit in the second quarter of FY16 on account of weak revenue growth, delays in product approvals and increased expenses.
L&T, HDFC and ITC also plunged between six and seven per cent, post the announcement of Q2 numbers. Other notable losers included GAIL and Coal India.
ICICI Bank slipped over three per cent after the announcement of Q2 numbers. The bank’s non-performing assets (NPA) stood at Rs 6,828 crore, higher than Rs 6,402 crore as on June 30, 2015.
Shares of Vedanta slipped over two per cent after the company posted a 40.6 per cent drop in its quarterly net profit, as continued weakness in commodity prices in global markets impacted its earnings from oil and gas and mining operations.
On the positive side, Maruti Suzuki advanced over 1.5 per cent after the car maker reported a 42 per cent jump in net profit for the second quarter on the back of increased volumes, lower material cost, lower discounts and favourable foreign exchange.
Cipla gained after entering into an agreement to sell its entire stake in Biomab Holding to Biomab Brilliant Ltd for a consideration of $25,775,000 to focus on biological segment under its arm Cipla BioTec.
Week ahead
Investment trend by foreign investors, movement of the rupee against the dollar and crude oil price will set the tone in the coming week.
Among Q2 corporate earnings, SBI, Tata Steel, Cipla, BHEL, Tata Motors, ONGC, DLF, Indian Oil Corporation, Ashok Leyland, Bank of Baroda will announce the results in the coming week.
Automobile companies will be in focus as companies will start announcing monthly sales data for October.
The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) data for the month of October 2015 is due on Monday.
On the global front, China’s Caixin Manufacturing PMI, US Nonfarm Payrolls report, US Unemployment Rate report will be unveiled next week.
