Weekly Wrap: Sensex loses over 2% on economic worries

Last Updated: Sat, Apr 06, 2013 04:29 hrs
Sensex falls 1 pct on worries about reforms, growth

​A weak report on India's services sector growth in March 2013, political uncertainty and caution ahead of quarterly results rendered the mood bearish during the major part of the week ended 5 April 2013, and took a fairly heavy toll of several blue chip stocks on the Indian bourses.

Recording losses in three of the five sessions, the BSE benchmark Sensex ended the week at 18,450.23, down 385.54 points or a little over 2%, from the previous week's closing mark. The broader 50-stock Nifty index of the National Stock Exchange ended lower by 129.30 points or 2.3% at 5553.25.

Midcap and smallcap stocks outperformed the big ones, attracting buyers during the earlier part of the week. While the BSE Midcap index edged up marginally, the Smallcap barometer ended nearly 2% up.

The market ended with modest gains on Monday, despite suffering a setback after a positive start. Though there were no positive triggers from the global front as most of the markets were closed for Easter holidays, the mood on the Indian bourses was slightly bullish, amid hopes the economy will see a moderate recovery in the near to medium term. The Sensex ended with a gain of about 29 points, while the Nifty moved up by 22 points.

Novartis plunged after the Supreme Court ruled that Novartis’s Gleevec, a drug for leukaemia and other cancers, isn’t eligible for patent in India. The two-judge panel of Aftab Alam and Ranjana Prakash upheld Indian regulatory rulings that the drug wasn’t sufficiently innovative to merit patent, according to reports. Several pharma stocks moved higher that day, following the Supreme Court's ruling on Novartis' cancer drug.

According to a report released by the government on Monday, the index of eight core industries fell 2.5% in February 2013 compared to their 7.7% growth in February 2012. The decline in growth in February 2013 was on account of negative growth witnessed in electricity generation and in the production of crude oil, coal, natural gas and fertilizers. The eight core industries have a combined weight of 37.90% in the Index of Industrial Production.

On Tuesday, the market shrugged off a weak start and subsequent listless movements, to end on a high note. Besides a firm trend in European markets, reports that Reliance Jio Infocomm and Reliance Communications have signed a Rs 1200 crore agreement for sharing Reliance Communications' nationwide optic fiber network lifted sentiment and triggered some hectic buying across the board. The Sensex closed stronger by 176 points, while the Nifty ended nearly 44 points up that day.

The market ended sharply lower on Wednesday, snapping its four-session winning streak, as investors indulged in some heavy selling in the final hour, choosing to exit counters ahead of the reporting season. Data revealing a weak services sector growth in March 2013 - it plunged to a 17-month low in March - and a weak start in European markets too contributed to the sell-off. The Sensex ended the day with a loss of 239 points, while the Nifty closed lower by 75 points.

According to a survey, growth in services sector eased in March to its slowest since October 2011 as order books filled at a slower pace. The HSBC services Purchasing Managers' Index, based on a survey of around 400 companies, fell to a 17-month low of 51.4 in March from 54.2 in February.

Stocks extended Wednesday's losses and closed notably lower on Thursday as worries about near term growth hurt sentiment once again. While the Sensex ended lower by almost 300 points, the Nifty lost nearly 100 points.

The market opened on a weak note on Friday, and despite seeing some buying at select counters during the session, ended lower, extending its losing streak to a third successive day.

Political uncertainty and worries about near term growth rendered the mood bearish. A weak trend in European markets too contributed to the decline. The Sensex ended the day with a loss of 59 points and the Nifty closed lower by 21.50 points.

Index heavyweight Reliance Industries ended nearly a percent up. Reliance Jio Infocomm, the Mukesh Ambani firm, and Anil Dhirubhai Ambani's Reliance Communications announced on Tuesday that the two had signed a definitive agreement for approximately Rs 1200 crore as one time indefeasible right to use fees for sharing RCom's nationwide inter-city fiber optic network infrastructure.

ITC lost 5.7% last week, while the other FMCG heavyweight in the Sensex eked out a gain of nearly 1%.

Metal stocks Sterlite Industries, Tata Steel, Hindalco and Jindal Steel & Power all ended notably lower. Sterlite Industries announced on Tuesday (2 April) that the Supreme Court of India vide its judgment dated 2 April 2013 has allowed the appeal of the company and set aside the judgment of the Madras High Court order dated 29 September 2010 vide which the company's Tuticorin Smelter was ordered to be closed.

Automobile stocks ended weak on lower sales. Tata Motors lost over 5%, Mahindra & Mahindra declined by 2.7%, Bajaj Auto lost 5.4% and Hero Motocrop ended lower by over 4%. However, Maruti Suzuki bucked the trend, thanks largely to some hectic buying on Friday following the yen's slide. The stock ended the week with a gain of nearly 10%.

IT majors Infosys (down nearly a percent), Tata Consultancy Services (down 4.5%) closed weak, even as Wipro ended with a sharp gain of 4%.

Bank stocks were mostly subdued last week. Heavyweights State Bank of India, ICICI Bank and HDFC Bank ended lower. Telecom stock Bharti Airtel and housing finance stock HDFC ended sharply lower.

Despite a few bright spells during the earlier part of the week, capital goods stocks closed mostly lower. Sector major Larsen & Toubro, despite a slew of new orders, ended lower by over 1%.

Pharma major Dr Reddy's Laboratories ended stronger by over 8%, with the launch of Zoledronic Acid Injection triggering some strong buying at the counter. Sun Pharmaceutical Industries notched up a gain of over 5%.

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