Weekly Wrap: Sensex loses 1.6% on profit taking

Last Updated: Sat, Feb 02, 2013 09:00 hrs

With several blue chip stocks drifting lower on profit taking, the key Indian stock indices Sensex and Nifty ended with notable losses last week (28 January - 1 February 2013).

The Reserve Bank of India, unveiling its monetary policy on Monday (28 January) did cut repo and CRR rates by 25 basis points each, on expected lines, but concerns expressed on growth front rendered the mood bearish for a better part of the week.

The Sensex and Nifty breached some crucial support levels, amid high volatility. While the Sensex ended the week with a loss of around 322 points or 1.6% at 19,718, the Nifty closed lower by 76 points or 1.2% at 5999. Though some midcap stocks found support, smallcaps were mostly subdued last week.

On Monday, interest rate sensitive bank, automobile and realty stocks saw some good buying, but the broad market moved in a tight range amid highly lackluster trades and ended flat. Both Sensex and Nifty ended with slender losses that day.

The market saw some brisk buying in rate sensitives on Tuesday after the Reserve Bank of India cut the Repo and CRR rates by 25 basis points each. However, with investors switching over to the selling mode, choosing to take some profits, the market lost its way and eventually ended the day with notable losses.

The Sensex, which advanced to 20,203.66 in mid-morning trades, ended the session with a loss of 112 points at around 19,990.90, while the Nifty closed lower by 25 points at 6049.90, more than 60 points off the day's high of 6111.80.

The Reserve Bank of India, which said widening current account deficit is restraining it from resorting to monetary easing, today announced a reduction of 25 basis points each in Repo and Cash Reserve Ratio rates. The central bank said the CRR cut will result in an infusion of around Rs 18,000 crore into the banking system. The bank lowered India's growth forecast for 2012-13, to 5.5% from the earlier projection of 5.8%. The apex bank revised downward its inflation projection to 7.5% from an earlier forecast of 6.8%.

The market ended marginally up on Wednesday after a choppy ride. The Sensex ended 14 points up, while the Nifty gained about 6 points.

On Thursday, profit taking took a toll of several blue chips and resulted in the Sensex and Nifty going down by 110 points and 21 points respectively. The trend was similar on the final session of the week as well, with investors in no mood to switch over to the buying mode. While the Sensex lost 114 points, the Nifty ended nearly 36 points down. Some erroneous orders in Tata Motors and Ultratech Cement during the fag end of the session resulted in the two stocks plunging by over 10%. However, both these stocks recovered some lost ground during the closing minutes.

Reliance Industries lost about 2%. ONGC ended lower by around 2.5%. On Thursday, the Cabinet Committee on Economic Affairs gave its approval to authorize ONGC Videsh to acquire Participating Interest owned by Hess Corporation's wholly-owned subsidiaries in the upstream and midstream oil and gas assets in Azerbaijan comprising 2.72% participation interest in the Azeri Chirag Guneshli (ACG) contract area and 2.36% participation interest in Baku-Tbilisi-Ceyhan (BTC) pipeline for an investment of $1.001 billion, plus certain adjustments including working capital, interest from the economic date and other defined elements on cash sink basis.

Enginering heavyweight Larsen & Toubro lost around 4.5%, despite the company bagging a few big orders. BHEL ended 1.8% down with a 17.5% drop in quarterly net profit triggering some heavy selling at the counter.

Among the gainers, ITC spurted more than 3%, Cipla moved up by nearly 4% and Coal India ended with a gain of 4.2% and Dr Reddy's Laboratories moved up marginally.

Despite some spells in positive territory, bank stocks mostly ended weak last week, with investors choosing to book some profits after recent upmove. ICICI Bank edged down marginally. It reported a strong 30% jump in net profit for the quarter ended December 2012. HDFC Bank ended 3.6% down and State Bank of India too closed with a sharp loss.

Automobile stocks turned in a mixed performance last week. Weak sales data dragged down Mahindra & Mahindra by about 1.5%. Maruti Suzuki, which saw a couple of bright sessions during the week, edged up by a little over half a percent. The carmaker reported a 1.1% drop in total sales, although its domestic sales rose 2% in January. Tata Motors ended with a loss of over 5%, due largely to Jaguar and Rover lowering its earnings forecast. Bajaj Auto ended the week with a loss of 1.2%, while Hero Motocorp move up by over 2.75%.

Among IT majors, Tata Consultancy Services lost 2.2% and Infosys ended 1.5% down, while Wipro closed little changed from previous week's closing price. On Monday, the Government of India announced the launch of eBiz - India's first Government-to-Business (G2B) portal, developed by Infosys in a public private partnership model.

Telecom stock Bharti Airtel plunged more than 8% following t he company reporting a 72% decline in net profit for the quarter ended 31 December 2012. Power stocks NTPC and Tata Power also closed on a weak note.

Metal stocks Jindal Steel & Power, Hindalco and Tata Steel ended notably lower. Sterlite Industries did fairly well, thanks to a 30% rise in net profit for the third quarter, and ended just marginally down.

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