)
It was a tumultuous week, with the markets edging lower with every trading session, thanks to the political uncertainty with the DMK pulling out of the ruling coalition and the Eurozone concerns. As a result, the BSE benchmark index, Sensex, lost 692 points or 3.56% to close at 18,735 and the Nifty gave off 221 points or 3.77% to close the week at 5,651.
The broader markets were no better and underperformed through the trading sessions. For the week, the midcap index fell 4.80% and the smallcap index weakened by 6.58%.
In the international markets, markets across Asia, US and Europe went into a tailspin after the European Central Bank warned Cyprus that it will cut off liquidity to Cypriot banks, if Cyprus is unable to raise the 5.8 billion euros ($7.4 billion) necessary for a 10 billion euro bailout package by Monday.
The one major positive development in the form of cutting key policy interest rates by 25 bps by the Reserve Bank of India in its mid-quarter review of monetary policy, which was largely factored in by the markets, was over shadowed by the negative politicking at the Center.
On the macro front, sounding a word of caution, Moody's Investors Service in a report said, India's sustained food inflation is a negative for the country's sovereign ratings as it exacerbates macroeconomic imbalances.
Among the sectoral indices, Realty, PSU, Power, Metal and Capital Goods were battered, losing 7-13%. The other indices like Oil & Gas, Bankex and Auto lost 5% each along with IT and Consumer Durables down 2% each.
However, defensive pockets like Health Care managed to restrict its losses to 1% while FMCG index closed for the week with a marginally positive bias gaining 0.07%.
From the realty pack, HDIL was the top dragger as the stock hit new lows after rating agency CARE assigned a junk grade to the company’s non-convertible debentures (NCDs) worth Rs 2,094 crore.
Among the Sensex-30 stocks, BHEL and Tata Steel down 9% each were the major losers followed by SBI, ONGC, Maruti Suzuki, L&T, Tata Motors and Coal India down 7-8%.
Tata Motors skidded on worries that China’s new stringent fuel economy norms might affect the company’s Jaguar Land Rover (JLR) unit. China contributes nearly 40 % of JLR’s operating profit.
Cobropost stung ICICI Bank, Axis Bank and HDFC Bank continued to be on slippery ground, having lost 2.6%, 3.1% and 5.2% respectively for the week.
Bharti Airtel slipped 5.4% after the 2G Trial Court summoned Sunil Mittal, chairman and managing director of the company in the additional spectrum allocation case.
Meanwhile, FMCG major ITC and HUL were the only stocks to close in the positive, up 1% and 0.2%.
Finally after much delay, the share sale of the country’s largest steel manufacturer, government-owned SAIL managed to scrape through with the government raising a little over Rs 1,500 crore.
According to Sanjeev Zarbade, Vice President – Private Client Group Research, Kotak Securities, going ahead, the markets would look forward to the Earnings Season, government commitment on maintaining the reforms momentum and global cues. With valuation turning reasonable, investors should opt for buying quality stocks with credible management and sound corporate governance.
