Weekly Review: Markets slump 4% as global indices weigh

Markets slumped 4% this week, owing to global cues as traders booked profits after the Sensex closed at a record high on November 5, 2010.

Slowdown in domestic industrial production took its toll on Friday, as the Sensex crashed over 400 points in late trades - taking the week's loss to 848 points. The Sensex ended at 20,156. The Nifty shed 241 points this week to end at 6,072.

Festive sentiments, coupled with the US Federal Reserve's QE2 decision had buyoed the BSE benchmark to an all-time closing high of   21,005 on Muhurat trading day. More positive reaction was expected as US President Barack Obama, on his India visit, announced deals which would create jobs for thousands in India and US.

Globally markets were subdued this week. But the big dampener came as the Shanghai Composite crashed 5% on Friday owing to fears that China would increase interest rates to further coal inflation. The Seoul Composite, Hang Seng, Nikkei and Taiwan Weighted shed 0.08% to 2% each.

The Dow dropped 0.7% while European indices, too, slipped 0.5% to 1.7% each. Globally, investors were dissapointed as Obama declined the South Korean trade agreement in the G-20 meet in Seoul.

Analsysts expect markets to remain volatile in the coming sessions due to panoply of developments globally."There are a lot of events happening globally like the G20, Ireland's mounting debt, Greece crisis again which have resurfaced and, also the IIP data will lead to a lot of volatility in coming days," said Shailesh Kadam, AVP-Derivatives, PINC Research.

The September industrial production grew by 4.4% as compared to 8.2% in the previous year. Manufacturing sector growth came in at 4.5% compared to 8.3% in the same period previous year. The biggest disappointment came from electricity sector, which grew by 1.7% compared to 7.4% in the previous year, government data revealed on Friday.

Food price index rose 12.3%, while the fuel price index climbed 10.6% in the year to October 30, government data on Thursday showed.

Traders say the market has priced in inflation at about 8.4-8.5 per cent, but if the reading is higher than that, it could push up bond yields by 5-6 basis points.

Quarterly numbers dictated the direction of most shares this week.

The state-run, Power Grid Corporation's FPO bidding closed on Friday. The issue was subscribed over 14.8 times on the BSE-NSE demand graph.

SBI slumped 13% to Rs 3030 on a 22% decline in consolidated net profit at Rs 2,437 crore for the second quarter ended September 2010 due to a merger with State Bankof Indore. Following this, the Reserve Bank of India (RBI) has downgraded SBI from B to B-, following an inspection of the bank's books for the fiscal year ended March 2009.

Telecom stocks dropped. Bharti Airtel's net profit declined 27% due to a declining market share. The stock dropped 7% to Rs 306. Reliance Communications slipped 6.5% to s 170.

Market heavyweights slid. ICICI Bank and Reliance were down 4-2% each. Infosys shed 2.6% at Rs 2,999.

DLF, Bharti Airtel, ONGC, HDFC Bank and ITC were some of the other major losers. Metal stocks slipped on a global decline in metal prices. Hindalco and Jindal Steel dropped 4% each while Tata Steel shed 2.8% in trades today.

However, Sterlite and Tata Motors ended flat at Rs 181 and Rs 1,246, respectively. Earlier this week, Tata Motors had touched an all time high of Rs 1,350 on reporting a massive 102-fold jump in its consolidated net profit for the quarter ended September 30.