Weekly: Markets slip for third consecutive week

The markets slided for the third week in a row as a poor election result for the ruling Congress party appeared to pour cold water on an already-struggling reform agenda. Compounding to the apprehensions were steady crude oil price, Rupee fluctuations and a visibly slowing Chinese economy. The Sensex lost 0.76% for the week and the Nifty pared 0.48% to close the week at 5,333.

In the broader markets, the midcap index largely managed to hold on to its gains, losing 0.2% while the smallcap index slipped 1.15% for the week.

The top news for the week was the poll results for the five states namely Uttar Pradesh (UP), Punjab, Uttarakhand, Manipur and Goa. In UP, Mulayam Singh Yadav led Samajwadi Party posted a comfortable victory, winning 224 seats. In Punjab, Shiromani Akalidal and BJP led coalition won 68 seats. On the other hand, in Uttarakhand, Congress managed to scrape through to lead while in Manipur, the ruling party at the Center sweeped the polls.

On the macro front, exports in February grew 4.3 per cent to $24.6 billion while in a massive contrast; imports grew 20.6 per cent in the same month to $39.8 billion, resulting in a trade deficit of $15.2 billion, the highest since November 2011. Total exports during April-February rose 21.4 per cent to $267.4 billion and imports reached $434.2 billion, up 29.4 per cent. That made for a trade deficit of $166.8 billion, commerce secretary Rahul Khullar said.

Indirect tax collections in April-February 2011-12 increased 14.6 per cent to Rs 3,48,702 crore, compared with Rs 3,04,212 crore in the corresponding period of the last financial year. This is nearly 88.7 per cent of the Budget Estimate for the full financial year. In February, these rose only 9.6 per cent to Rs 31,469 crore, against Rs 28,705 crore last year, with excise collections still the problem. The government now needs to collect about Rs 44,000 crore in March to meet its year’s target of Rs 3,93,000 crore.

On the international front, Greece averted the immediate threat of an uncontrolled default on Friday, winning strong acceptance from its private creditors for a bond swap deal which will eat into its mountainous public debt and clear the way for a new bailout. With euro zone ministers set to approve the euro 130 billion ($172 billion) rescue, French President Nicolas Sarkozy declared the Greek problem had been settled — just as Germany said that any impression the crisis was over "would be a big mistake".

Springing a surprise for the week was the Reserve Bank of India (RBI) on Friday. In a pleasant surprise to the market, the RBI reduced the cash reserve ratio (CRR) — the portion of deposits banks have to keep with the central bank — by 75 basis points. This will infuse Rs 48,000-crore liquidity into the system. The cut, which comes less than a week ahead of the mid-quarter review of monetary policy, scheduled on Thursday, is aimed at avoiding a cash crunch due to the advance corporation tax outflow scheduled later next week. That could have caused short-term rates to shoot up. Market participants were expecting a 50-basis-point cut in CRR.

On the market front, the much talked about IPO to kickstart the action in the primary market for 2012, Multi Commodity Exchange (MCX) made a stellar stock market debut, with a 26% premium over its IPO price on the Bombay Stock Exchange. In a decision made at the 11th hour by the National Stock Exchange too allowed the trading of MCX shares on its platform.

Among the sectoral indices, Consumer Durables, Auto and FMCG were the top gainers, which added 1% each. The other indices to close in the green were Bankex, health care and IT up 0.5-0.7%.

The movers in the Consumer Durables space were Titan, Rajesh Exports and TTK Prestige which added between 3-4%

Meanwhile, Metal, Oil & Gas, Power and Capital Goods down 1-3% were the top losers for the week.

Metal stocks have come under pressure on concerns that a slowing global growth may reduce demand for industrial metals. Earlier this week, citing weaker exports, China scaled down its gross domestic product (GDP) growth target for 2012 to 7.5 per cent, compared to eight per cent last year, making it the country’s lowest target in six years. While Europe’s GDP declined 0.3 per cent in the last quarter of 2011, economic growth in Australia came in at 0.4 per cent.

The top losers here were Hindalco, Sterlite, Hindustan Zinc, SAIL, Sesa Goa sliding 5-9%.

Among the Sensex stocks, auto major Tata Motors was the top gainer, adding 4% followed by ITC, Maruti Suzuki, ICICI Bank, Coal India, HDFC and Wipro up 1% each.

Apart from the metals, oil companies like BHEL, GAIL and Reliance Industries down 5-6% were the top Sensex losers. Tata Power, Bharti Airtel, NTPC and Tata Steel which lost between 3-5% were the other notable losers.