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Weekly Wrap: Sensex edges higher amid volatility

Last Updated: Sat, Nov 03, 2012 07:15 hrs
A man walks past the BSE building in Mumbai

Markets ended on a positive note for the week ended November 2 amid volatility due to macro economic and political headwinds. The Sensex advanced 0.7% or 130 points to close at 18,755 and the 50-share Nifty advanced 33 points or 0.59% to settle at 5,698.

Markets gained optimism after the Cabinet reshuffle which happened on Sunday. However, it could not sustain the momentum as the Reserve Bank of India decided to hold the key rates steady while reducing the cash reserve ratio (CRR) by 25 bps. Global cues were also subdued as the trading was halted for two days in the US due to hurricane Sandy.

Showing concerns over hardening inflation, the Reserve Bank today left the key interest rate unchanged but reduced cash reserve ratio by 0.25% to infuse additional liquidity that will inject Rs 17,500 crore into the financial system.

Accordingly, the CRR or the portion of deposits banks have to park with the RBI now stands at 4.25% while the repo rate, at which RBI lends to the system, has been retained at 8%.

The reverse repo, at which RBI absorbs excess liquidity through borrowings from banks, remains at 7%.

The RBI also revised downwards the GDP growth estimate to 5.8% from the earlier 6.5%, while increased its March-end headline inflation forecast to 7.5%. It is the second time since the beginning of the fiscal that it has revised its estimate on both the aspects.

There was widespread expectation that the Governor may play the ball with the government today especially after North Block announced a fiscal consolidation roadmap against the backdrop of the backdrop of the gush of reform measures announced in the past 45 days.

Worried over high budget deficit derailing growth, Finance Minister P Chidambaram today unveiled a five-year road map for fiscal consolidation to promote investments, contain inflation and take India to high growth trajectory.

The government, the Minister said, will continue efforts to restrict fiscal deficit in the current financial year to 5.3% of the Gross Domestic Product (GDP) and reduce it to 3% by 2016-17. The fiscal deficit was 5.8% in 2011-12.

On the earnings front, government-owned power equipment maker Bharat Heavy Electricals Ltd (BHEL) disappointed the markets by reporting a 9.8 per cent fall in net profit at Rs 1,274 crore during the second quarter ended September 30. Revenue, too, grew marginally to Rs 10,399 crore from Rs 10,299 crore year-on-year (y-o-y). Shares of the company closed lower by 5.4% at Rs 229 on the Bombay Stock Exchange following the earnings announcement.

Maruti Suzuki India Limited (MSIL), the country’s largest car maker, on Tuesday reported a net profit of Rs 227.50 crore for the quarter ended September, a fall of 5.4 per cent compared with the Rs 240-crore net profit in the year-ago period.However, the result was better than what analysts expected and the stock closed with a gain of 7.3% at Rs 1,466 on a weekly basis.

Customer care-to-information technology (IT) services major Wipro on Friday reported a net profit of Rs 1,611 crore for the quarter ended September, a rise of 24 per cent over the corresponding period last year. The rise in profit was primarily driven by the better-than-expected performance of its flagship IT services business. The stock ws the top Sensex gainer on a weekly basis and it advanced 8.6% to settle at Rs 365.

Among the other heavyweight stocks, Bajaj Auto, Cipla, Dr Reddy's Labs, Mahindra & Mahindra, Hindalco, Hero MotoCorp, Tata Motors, Bharti Airtel, Infosys, Sun Pharma, Tata Power, TCS, Reliance Industries, HDFC and Jindal Steel also closed higher by 1-6% each. While, HUL, ONGC, Larsen & Toubro, GAIL India, SBI, HFC Bank, ITC and NTPC were among the losers down 0.6-3% each.

On the sectoral front, the BSE consumer durable index was the top gainer, the index advanced 5% or 356 points to close at 7,378 led by better-than-expected second quarter earnings showcased by the heavyweight Titan Industries. Auto index surged 4% to 10,690 driven by the monthly auto sales numbers. Healthcare, IT and metal indices also advanced 1-3% each. On the other hand, led by the selling pressure faced by Larsen & Toubro and BHEL, the BSE capital goods index was the top weekly loser. The index slipped 2% to end at 11,114. FMCG, PSU, bankex, oil & gas and power indices also closed on a weak note.

The broader markets also ended on a mixed note with BSE mid-cap index gaining 0.6% while the small-cap index closed lower by 0.3%.

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