Weekly: Broader markets outperform while Sensex skids

Market slipped for the second straight week on account of disappointing Q3 GDP numbers, rising crude prices and a failed ONGC auction. For the week ended that saw a special trading on Saturday, the markets ended lower where BSE benchmark index, Sensex lost 1.6% and Nifty shed 1.3%.

However the broader markets outperformed with the midcap index, up 1% and the smallcap index closed flat.

Foreign institutional investors (FIIs) bought shares worth Rs 25212.10 crore in February 2012, as per data from Securities & Exchange Board of India.

On the macro front, India's GDP for the third quarter was much lower compared to the corresponding quarter last year. The GDP growth of 6.1% in the third quarter this fiscal, lowest in more than 2 years due to poor performance of the manufacturing, mining and farm sectors was not in line with the street expectations and dampened the investor sentiment. The GDP growth the in third last fiscal was 8.3%, as per the latest data released by the government.

Meanwhile, the total merchandise exports in the first 10 months of the financial year through January reached $242.80 billion, triggering hopes of meeting the government’s target of $300 billion for the whole year. On the other hand, cumulative imports stood at $391.45 billion, widening the trade deficit to $148.67 billion, the government said. This is for the second time that exports had registered a month-on-month increase, since it started falling July onwards due to a weak demand in Europe and US markets.

The biggest setback of the week was the government's failure to sell all of the shares in its $2.5billion auction of a 5% stake in Oil and Natural Gas Corp (ONGC) in its effort to revive stock sales and trim the expanding fiscal deficit. Against 427.77 million shares on offer, bids were received for 420 million, or 98.3 per cent. Of this State-owned Life Insurance Corporation (LIC) pumped in over Rs 12,000 crore and purchased 95% of the equity put on the block.

New Delhi hoped to follow up the ONGC sale by unloading shares in companies including Bharat Heavy Electricals Ltd (BHEL), Steel Authority of India Ltd (SAIL) and Oil India but will need to rethink how it manages and prices those deals.

Oil was on boil through the week. Brent oil futures rallied, rising more than 2% to a 10-month high above $126 after Israel said it would test-fire a ballistic interceptor missile, raising fears of a conflict with Iran. The unusual announcement further boosted oil prices already strongly higher on upbeat economic data from US and China and worries of Iran-related supply disruptions.

On the international front, earlier this week, the European Central Bank (ECB) announced that 800 banks had borrowed 530 billion euro under its second tranche of long-term refinancing option (LTRO). The ECB opened its long-term refinance window for the first time in December 2011, when European banks were severely cash-strapped and they did not have the required funds to repay maturing debts.

Among the sectoral indices, defensive segment, Health care was the only index that closed in the positive with a 2% gain. On the other hand, Realty, IT and Capital Goods were the top losers, shedding between 2-4%.

The movers in the Health care space were Aurobindo Pharma and Wockhardt up 9% each.

Among the realty stocks, DLF slumped 10% on report that the Canadian research firm Veritas said the accounting practices of the realty major is “conflicting" and pointing at gaps in its business model — charges the company termed “mischievous and presumptive" followed by Anant Raj losing 7%.

Among the Sensex stocks, the top gainers were Sterlite, Sun Pharma, Maruti Suzuki,Bharti Airtel and SBI which gained between 2-5%. The gains in Sterlite came after the announcement of merger of Sesa Goa and Sterlite Industries by the parent Vedanta group.

On the losing side for the week were Mahindra & Mahindra, Hero Motocorp,TCS, JIndal Steel and L&T down 4-6%.  The fall in India's largest utility vehicles and tractor maker Mahindra & Mahindra, was due to the reported 4% month-on-month (m-o-m) drop in its February sales at 43,087 units from 44,717 units sold during January 2012. The company had sold total 33,378 units in the month of February 2011.