A mix of negative cues, both global and domestic, connived to spook the markets in the holiday-truncated week. In a week cut short by the Bakri-Id on Monday and Gurunanak Jayanti on Thursday, the Sensex ended at 17,192, weaker by 369 points and the Nifty ended at 5,168, down 115 points. The mid-cap index fell 2.16% and the BSE small-cap index fell 2.78%.
The first trading day of the holiday-shortened week passed off on an uneventful note. But the weakness across Europe took its toll on the bourses on Wednesday as a lack of clarity on the timing of the resignation of Italian Prime Minister Silvio Berlusconi was a matter of concern to investors. And the depressing news on the macro-economic front back home only added to the woes on Dalal Street. The markets touched 2-1/2 week closing lows on the last day of the week as data showed that industrial production rose by a dismal 1.9% in September 2011, the lowest rate of growth in two years. Growth in factory output, as measured in terms of the Index of Industrial Production (IIP), had stood at 6.1% in September last year. And food inflation showed no signs of cooling down despite the fire-fighting by the central bank throughout the year. Food inflation declined only marginally to 11.81% in the week ended October 29 from 12.21% in the preceding week.
Bank stocks had a rough ride after the US-based Moody's changed the outlook for the sector to negative from stable on Wednesday. Rival rating agency S&P, on the other hand, upgraded the Indian banking sector, saying its domestic regulations were in line with international standards, but the damage was already done. And in case of SBI, the poor results only aggravated the pain. The public sector giant tumbled 8.4% to Rs 1797, triggered by an increase in its bad loans in Q2 September 2011. The ratio of bank's gross non-performing assets (NPAs) to gross advances increased to 4.19% as on 30 September 2011 from 3.35% as on 30 September 2010. The net profit rose 12.35% to Rs 2810.43 crore on 23.43% rise in total income to Rs 29394.32 crore in Q2 September 2011 over Q2 September 2010. ICICI Bank shed 7% to Rs 822. In results announced in the previous week, the bank’s consolidated net profit had risen by 43% to Rs 1992 crore in Q2 September 2011 over Q2 September 2010. And HDFC Bank fell 3.76% to Rs 463.
The metals sector also received a pounding, mainly on account of result-specific news. Tata Steel tumbled 4% to Rs 430 on reporting a 93% year-on-year (y-o-y) decline in consolidated net profit to Rs 139 crore for Q2FY12 due to higher raw material costs. The company had clocked a profit of Rs 1,968 crore in the corresponding quarter last fiscal. Among other metal stocks, Hindalco slipped 4.3% to Rs 129 as a weak outlook hurt investor sentiment. Hindalco's net profit stood at Rs 503 crore for Q2FY12 against Rs 434 crore in the corresponding quarter last fiscal. And Hindalco fell 7.41% to Rs 128.70 after announcing that net profit rose 16% to 503 crore on 7% rise in revenues to Rs 6272 crore in Q2 September 2011 over Q2 September 2010.
And Kingfisher dropped 9% to Rs 19.65. The airline, which has been cancelling flights across several routes, faces fresh trouble as some companies who have lent aircraft to the loss-making airline plans to take them back, while about 130 staff pilots have quit in the past few weeks.
On the other hand, FMCG giant Hindustan Unilever (HUL) was the top Sensex gainer last week. The stock rose 4.5% to Rs 396. Select IT stocks rose on the back of a strong dollar. TCS rose 2.8% to Rs 1130 on the announcement that its subsidiary, Diligenta, had won a $2.2 billion 15-year contract from the UK-based pensions and insurance provider Friends Life. Wipro gained 2.7% to Rs 381 on the news that Premier Foods had selected Wipro Technologies, the global IT, consulting and outsourcing business of Wipro, as a strategic technology partner. And index heavyweight Reliance Industries edged higher by 0.48% to Rs 883.85.
In the midcap space, KSK Energy weakened by 32% at Rs 69, SKS Microfinance slumped by 24% at Rs 158 and Aurobindo Pharma shed 13% at Rs 111. And in the smallcap space, Orient nosedived by 64% at Rs 12, GATI slumped by 26% at Rs 39 and Bodal Chemicals lost 17% at Rs 16.
