The Reserve Bank of India's move to tighten liquidity to curb the rupee's slide triggered some heavy selling on the Indian bourses during the week ended 26 July 2013 and pushed the key indices Sensex and Nifty down by around 2% and 2.4%, respectively.
Quarterly results from India Inc were a bit mixed and cues from global markets were not any encouraging. Foreign institutional investors were net sellers during the week. According to data available from the exchanges, FIIs sold shares worth a net Rs 6157 crore in the current month (till 24 July).
Recording losses on three of the five sessions, the Sensex ended the week at 19,748.19, recording a loss of 401.66 points. The Nifty closed lower by 143 points at 5886.20.
With scores of midcap and smallcap stocks declining on selling pressure, the BSE Midcap and Smallcap indices lost 3.57% and 3.33%, respectively.
After a somewhat listless start and a subsequent tight spell, the market rallied smartly around noon, but gave up its gains and faltered into the red in the final hour on Monday after Larsen & Toubro reported disappointing results for the April - June 2013 quarter.
While the Sensex, which rose to 20,264.90 a little past noon, ended the day with a gain of 9.27 points, the Nifty closed with a gain of 2.60 points that day.
On Tuesday, the market surged higher on strong global cues. The Sensex moved up by 143 points and the Nifty gained 46 points, hitting their best closing levels since 4 January 2011 and 30 May 2013, respectively.
The Reserve Bank of India's liquidity tightening measures triggered a sell-off in the banking space and rendered the mood on the Indian bourses quite bearish at the ring on Wednesday, and although stocks from information technology and healthcare sectors managed to find some support, the key indices Sensex and Nifty ended with notable losses.
As stocks went sliding down, the Sensex plunged beow the magical 20,000 mark to 19,994.25 a little past noon, and despite staging a recovery of sorts, ended the session with a sharp loss of 211 points. The Nifty, which declined to 5962.60, closed with a loss of 87.30 points.
Bank stocks reeled under sustained selling pressure following the central bank's liquidity tightening measures. The Reserve Bank of India has reduced the liquidity adjustment facility for each bank from 1% of the total deposits to 0.5%, thus limiting the access to borrowed funds from the central bank. The central bank has also asked banks to maintain higher average CRR of 99% of the requirement on daily basis, as against the earlier 70%.
The market tumbled on Thursday with investors indulging in heavy selling at several counters almost right through the session, tracking weak global markets. Amid worries about prospects of the U.S. Federal Reserve winding up its stiumulus program on the back of some encouraging economic data out of the U.S., markets across Asia and Europe declined, rendering the mood on the Indian bourses quite bearish. The Sensex ended the day with a loss of 286 points and the Nifty closed lower by 83 points.
ACC and Ambuja Cements declined sharply following their Swiss parent Holcim announcing a major restructuring of its India operations. Ambuja Cements' net profit fell 30.85% to Rs 324.20 crore on 7.64% decline in total income to Rs 2450.87 crore in the quarter ended June 2013, as compared to the corresponding quarter last year.
Worries about near term economic outlook and some weak results from India Inc dragged down stocks on the Indian bourses and pushed the key indices Sensex and Nifty to another negative close on Friday. The Sensex ended down 57 points, while the Nifty closed with a loss of 21.30 points.
With the mood remaining quite bearish, as many as 21 stocks out of the 30-stock strong Sensex ended the week on the negative side last week.
Some weak results (the surge in NPAs hurt the most) from some top notch banks and the central bank's latest measures to tighten liquidity in the banking system triggered heavy selling in the bankins space. Almost all bank stocks tumbled, with several of them going down quite sharply. Sector heavyweights State Bank of India (down 2.7%), ICICI Bank (down 2.7%) and HDFC Bank (down 5.3%) were weak almost right through the week.
Disappointing results dragged down Larsen & Toubro. The stocks plunged over 13%, hitting a 52-week low in the process. The company reported a 12.5% year-on-year declined in its net profit at Rs 756 crore for the quarter ended June 30, 2013 on account of job mix, lower margin accruals and lower other income. In the corresponding quarter last year, the company had posted a net profit of Rs 864 crore. The power segment recorded a 38% yoy fall in profit at Rs 98.52 crore against Rs 159.86 crore in a year ago quarter, the company said in a filing to the exchanges. BHEL, the other capital goods major in the Sensex, too hit a new yearly low last week and ended lower by about 8.6%.
Metal stocks declined sharply with economic data out of China hurting sentiment to a significant extent. Mirroring their slide, the BSE Metal index lost over 3.5%. Bank stocks declined on some weak earnings reports. Sterlite Industries lost over 7.5% following a 22% decline in net profit for the quarter ended June 2013. Jindal Steel & Power and Tata Steel declined by over 9% and Hindalco ended lower by 8.8%.
Among FMCG majors Hindustan Unilever lost 3.3% following a 23.4% drop in net profit for the quarter ended 30 June 2013. ITC edged down marginally, despite an 18% rise in net profit.
Bharti Airtel moved up nearly 2.5%, amid hopes of a reduction in spectrum price for the third round of auctions. Other telecom stocks Idea Cellular, Tata Teleservices, Reliance Communications and Tata Communications also saw some good spells during the week.
In the oil space, Reliance Industries lost 3.6%. Reliance Industries ended more than 1.5% down. Reliance Industries said after trading hours on Friday that its net profit rose 18.9% to Rs 5352 crore on 4.6% decline in revenue to Rs 90,589 crore in the April - June 2013 quarter, from the year ago period. The company's operating profit before other income and depreciation rose 3.9% to Rs 7075 crore in the June 2013 quarter, from the corresponding quarter last year.
Reliance Industries also said it will invest over Rs 30,000 crore in the next three years in its US shale gas business. The company had acquired shale gas assets in the US in 2010 for $3.45 billion and has already invested $5.7 billion in shale gas joint ventures till the June 2013 quarter. Reliance Industries reported last Friday that revenue from its shale gas venture in the U.S. rose 84% thanks to rising production.
GAIL India ended lower by a little over 4% on weak results.
Among automobile stocks, Maruti Suzuki declined by over 5%, despite the company reporting a 49% jump in net profit in the first quarter. Bajaj Auto gained over 3% on fairly impressive results.
Hero Motocorp ended stronger by around 5.3%. Though the company reported a near 11% decline in net profit, the lower net profit was due largely to higher tax rate on account of the expiry of the 5-year 100% exemption period in Haridwar, where the company's largest production unit is located.