Weekly review: Markets slump on global worries

All sectors, barring FMCG, drop during the week

Markets ended the week on negative footing as global stocks tumbled on renewed fears of Greece and Spain's debt problem. Domestic events such as the F&O expiry and data showing a deficit in monsoon rains also played its part. The Sensex ended down 319 points (nearly 2%) to 16,839. Nifty slipped 105 points to 5,100.

Meanwhile, Moody's cited the costs associated with a potential Greek exit from the euro zone and the possible need to provide support to Spain and Italy as the reason for the change in outlook for top-rated Germany, Luxembourg and the Netherlands.

Back home, the country's crucial monsoon rains will improve in coming days, the country's weather office chief said on Thursday, which should narrow the shortfall in rainfall for the current rainy season that began in June.

Agriculture minister Sharad Pawar raised the prospect of drought for the first time this year, saying on Thursday officials would discuss next week the so-far meagre monsoon rains that are key to the economy of this major consumer and producer of food crops.

Weak global cues along with strict loan restructuring norms by the RBI took markets lower on Monday. Wednesday, markets slipped once again after postponement of hike in diesel prices dampened sentiment and ahead of expiry of July derivative contracts with HUL and Reliance Industries leading the decline. Expiry day saw markets end on a weak note once again, dragged by index heavyweights. Friday's sharp recovery owing to global cues, helped markets regain some lost ground.

All the sectoral indices, barring BSE FMCG index slipped in trades. BSE FMCG index ended up 0.8% at 4,978. BSE realty index slumped 6.6% to 1,569, followed by capital goods, power and metal indices. Broader markets underperformed with the indices losing 4.8% each during the week.

Bharat Heavy Electricals Limited (BHEL) slumped 9% to Rs 208 in spite of reporting a better-than-expected 13% year-on-year (yoy) growth in net profit at Rs 921 crore for the quarter ended June 2012. Analysts, on an average, expected a net profit of Rs 786 crore from the state-owned capital goods company.

Hindustan Unilever added 4.2% to Rs 465 after reporting 112% year-on-year (yoy) jump in net profit at Rs 1,331 crore for the quarter ended June 2012, on back of land deals. The core net profit (before accounting for exceptional items) has increased by a 48% to Rs 855 crore during the recently concluded quarter. Revenues grew 14% at Rs 6,250 crore during the quarter under review on yoy basis.

Maruti Suzuki dropped 3% to Rs 1,111 after the country’s largest car maker declared a lockout at its Manesar plant, which accounts for about 40% of its total capacity. It has ruled out restarting production until a probe is completed into rioting that led to the death of a manager.

Wipro shed 8% to Rs 334 on reporting a lower-than-expected 18% year-on-year growth in net profit at Rs 1,580 crore for the first quarter ended June 30, 2012 and forecast subdued IT services sales for the current quarter. Analysts, on an average, expected net profit of Rs 1,622 crore from the country's third-largest software firm.

Larsen and Toubro ended down 5% at Rs 1,320 The engineering major reported 300 bps decline in EBITDA (earnings before interest, taxes, depreciation and amortization) margins to 9.09% for the quarter ended June 2012, against 12.11% in year ago quarter.

Reliance Communications (RCom) dipped 15% after the Anil Ambani-promoted telecom firm said that it has put on hold the initial public offering (IPO) of its undersea cable unit, Flag Telecom, in Singapore due to adverse market conditions.