The markets had another shaky week on account of the lingering issues on the macro-economic front, concerns of a slowdown in corporate profit growth and the burden of technical factors. The BSE Sensex swung in a range of 885 points between a high of 18,810 and a low of 19,295 before ending the week at 17,728, down 279 points or 1.5%, and the Nifty ended at 5310, down 86 points. The midcap index ended at 6475, lower by 258 points or 3.8% and the smallcap index shut shop at 7808, down 522 points or 6.2%.
The benchmark indices had started the week on an encouraging note, with the Sensex ending above the psychological 18k mark, post the previous Friday's battering and the gyrations witnessed through the course of the past week. But from thereon, the markets were back to their bearish ways, as has become the norm in this calendar year. The poor IIP data, the inability of the all-party meet to break the imbroglio on the opposition demand for a JPC probe into the 2G scam, and the concomitant, a smooth parliamentary budget session and additional scams tumbling out of the beleaguered government's closet, took the headwinds off the markets midway through the week. It was only the combination of short-covering and value buying that resurrected the markets from the marass on Friday. The weekly closing was not so bad, considering that we were staring down the barrel at one point, with the Nifty hurtling towards the crucial 5000 mark.
The next week would tell whether we have some kind of a temporary bottom in place. Atleast the start of the upcoming week should be good, given the return of normalcy in Egypt after the unceremonious exit of the besieged Egyptian President Mubarak late on Friday. In fact, stocks rose in the US and NYMEX crude oil futures fell to near $85 dollars a barrel in the aftermath of the news development. The upcoming Union Budget and an oversold situation, by virtue of the Indian bourses being the worst performer among the emerging markets, are also reasons that could extend Friday's pullback rally. News reports that the Finance Minister Pranab Mukherjee may introduce the much-delayed bill to roll out the GST regime, may also be a positive.
Meanwhile, the IIP data for the month of December came in at a disappointing 1.6% compared to 2.7% in November. The manufacturing sector growth stood at 1% compared to 19.6% during the previous year, electricity sector grew by 6% versus 5.4% and the capital goods sector growth came in at 13.7% versus 42.9%. There were re-assuring voices from the government side though. Sticking to its projection of over 8.5% GDP growth this fiscal, the Planning Commission Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the monthly variations in industrial output numbers should not be a cause of concern. And while expressing disappointment at the low industrial output growth in December, the finance minister Pranab Mukherjee said the monthly numbers do not reflect correct picture of the economy.
The Finance Minister and government's main trouble-shooter Pranab Mukherjee was unable to get an obstinate opposition to give up its demand for an immediate constitution of a joint parliamentary committeee to look into the 2G case. And two additional instances of suspect spectrum allocation only added to the market's discomfiture. As per reports, the government is probing the Indian Space Research Organisation (ISRO) for a 2005 allocation of mobile internet spectrum without a proper bidding process that may have cost the exchequer up to Rs 2 trillion. The government is also reportedly investigating whether the state-run telecom company BSNL appointed franchises for broadband wireless access without charging any upfront payment.
On the positive side, though, the government estimated the GDP for the 2010/11 fiscal year to grow at 8.6% and was optimistic that India would move up in global GDP rankings to within the top 10 economies. The farm output may grow 5.4%, industrial growth should reach 6.2% and the service sector is projected to grow by 11% in the current fiscal ending in March, the government statement said. India's economy has grown at 8.9% for two consecutive quarters in the current financial year.
And there was a heartening decline in food inflation, which eased in end-January due to the moderating prices of fruits and vegetables. The food price index rose 13.07% and the fuel price index climbed 11.61% in the year to January 29. In the prior week, the annual food and fuel inflation had stood at 17.05% and 11.61% respectively. The primary articles price index was up 16.24% in the latest week, compared with an annual rise of 18.44% a week earlier. But the annual headline inflation in January is still expected to remain high. Headline inflation was 8.43% in December as the food inflation had reached a one-year high then.
The ADAG pack had a topsyturvy week to emerge as the top the losers list on the BSE. Reliance Infrastructure and RCom were hammered nearly 20% in Wednesday's session on rumours that the CBI could question or even arrest senior officials of the group in connection with the 2G scam. A statement by the Reliance ADA Group that it had identified stock brokers sending "baseless sensational charges" against the group and a denial by the ADAG group about Reliance Infra and RNRL receiving a notice from auditing regulator ICAI with regard to the consent settlement reached by the two companies with Sebi, led to a bounceback on the two counters. The announcement of a board meeting on February 14 to mull buyback of equity shares further aided the rebound in Reliance Infrastructure. RCom still ended the week down 15% at Rs 97 and Reliance Infra lost 9% at Rs 615.
The realty stocks had a terrible week as the sword of Damocles hung over their head post the arrest of the managing director of DB Realty, Balwa, by the CBI. Parsvnath Developers crashed by 37% at Rs 26, Unitech slumped by 19% at Rs 34 after being named by the CBI as one the beneficiaries of cheap spectrum allocation in 2008 and Orbit Corporation lost 15% at Rs 50. DB Realty ended marginally lower by 0.1% at Rs 139. However, DLF retraced its intra-week losses to actually end at the top of the BSE gainers charts. Metals also took it on the chin, with Hindalco tanking 10.8% at Rs 211 and Tata Steel losing 6.4% at Rs 595.
Among individual stock losers, ONGC gave up 6.7% at Rs 277 after turning ex-bonus and ex-stock split. The company's board had earlier declared the sub-division of each equity share of Rs 10 each fully paid-up into two equity shares of Rs 5 each and issue of bonus shares in the proportion of one new equity bonus share of Rs 5 each for every one existing share of Rs 5 each and had fixed February 09 as the record date for the purpose. Index heavyweight RIL retraced from 52-week lows of Rs 885, but still ended down 0.9% at Rs 910. And Tata Motors recouped its early losses to end marginally down by 0.4% at Rs 1144. Announcing its results at the fag end of Friday's trading session, Tata Motors posted a 272.92% jump in Q3 consolidated net profit at Rs 2,424 crore versus Rs 650 crore (YoY) and its consolidated net sales leaped from Rs 26,043 crore to Rs 31,510 crore.
On the other hand, the financials had a decent week; HDFC strengthened by 2.6% at Rs 620, HDFC Bank gained 2% at Rs 2060 and ICICI Bank added 0.5% at Rs 1001.
In the midcap space, Parsvnath Developers crashed by 37% at Rs 26, Bombay Dyeing collapsed 24% at Rs 297 and BEML lost 22% at Rs 616. And the smallcap space saw the likes of Allied Digital sliding by 38% at Rs 78, MIC Electronics shedding 32% at Rs 19 and Sujana Metal losing 23% at Rs 9.
