Weekly Review: Markets slip on weak rupee, global worries

Auto shares lead losses, SBI helps in recovery

Markets slipped for the fourth straight week as the rupee touched an all time low and global shares tumbled after Greece failed to form a government. The Sensex dropped 140 points or 0.8% at 16,153 while Nifty closed down 37 poionts at 4,891.

Markets slipped on Monday,amid weak global cues, weighed down by banks as rising inflation dashed hopes of further cuts in key policy rates by the central bank. On Tuesday, markets recovered marginally on the back of buying in select stocks.

Markets were weak once again on Wednesday with the rupee falling sharply. Politicial uncertainty in Greece also dampened investor sentiments. Fears of a Greek exit from the euro zone worsening the debt crisis facing other European nations gripped financial markets sending shares and other riskier assets lower as investors shifted funds into safe havens like the US dollar.

Markets recovered once again towards the end of the week after better-than-expected earnings from the country's largest lender, State Bank of India, eased worries over credit growth and non-performing assets in the banking sector.

Back home, on the macro economic front Inflation moved up to 7.23% in April on account of spurt in prices of vegetables, meat, milk and pulses, although onion and fruits showed a declining trend. Inflation, as measured by the Wholesale Price Index (WPI), was 6.89% in March. In April last year, it was 9.74%.

Meanwhile, the rupee has continued to depreciate and touched an all time low of 54.82 against the dollar early on Friday. Barclays Capital expects spot rupee to hit 56 in one month and then subsequently rise only to 54 within three months; the USD/INR is currently at 54.71.

BSE FMCG index was among the few sectoral indices to gain during the week. The index ended up 1.7% at 4,698, followed by healthcare and IT indices. However, BSE auto index slumped 5.6% to 9,106 as auto majors reported marginal sales increases for the month of April.

BSE mid and small-cap indices also underperformed the benchmark index - dropping 1.5-2.5% each.

During the week under review, State Bank of India rallied 4.8% to Rs 1,942 after reporting better-than-expected net profit at Rs 4,050 crore for the fourth quarter ended March 2012, due to lower provisioning and higher other income. Analysts on average had expected net profit at Rs 3,477 crore from India’s largest lender.

Larsen & Toubro ended up 2% at Rs 1,162 after the company reported a growth of 13.89% in its standalone net profit at Rs 1,920.41 crore for the quarter ended March 31, 2012, largely on the back of improved order inflows. Meanwhile, Nomura has downgraded Larsen & Toubro to 'reduce' from 'buy', and nearly halved target price to 992 from 1,691.

Maruti Suzuki slipped 5.6% to Rs 1,165 on reports that the company have downscaled its proposed investment plans in Mehasana, Gujarat.

Bharti Airtel also slipped 3% to Rs 297 after the MoS for Finance said the company was facing investigation under India's money laundering and foreign exchange rules.

ITC advanced 2.3% to Rs 239 on reports that the company has signed an agreement with the Board of Investment of Sri Lanka to build a luxury hotel in Colombo. HUL gained by nearly 1%.

Index heavyweight Reliance slipped 1.2% to Rs 688 as traders say the company is increasing the volumes of its ongoing share buyback programme. The Indian energy conglomerate has bought 14.3 million shares since its buyback opened on February 1, traders estimate. It will close on January 2013.