Weekly Wrap: Sensex, Nifty drift lower

Last Updated: Mon, Oct 17, 2016 10:07 hrs

The Indian stock market saw some wild swings last week - a truncated one due to holidays on Tuesday and Wednesday, for Dussehra and Muharram, respectively - with investors reacting to some crucial economic data and quarterly earnings reports from Infosys and TCS. The trend in global markets too contributed to some volatility on the Indian bourses.

The BSE benchmark Sensex ended the week with a loss of 387.54 points or 1.38% at 27,673.60, well below the psychological 28,000 mark. The Nifty50 of the National Stock Exchange declined 114.20 points or 1.3% to 8583.40. Midcap and smallcap stocks found some support. Still, the indices tracking the movements of these stocks closed in negative territory, losing 0.9% and 0.35%, respectively.

It was a slightly positive start for the market with select stocks edging higher on Monday despite investors treading cautiously ahead of holidays and key results and economic data. The Sensex edged up by 21.20 points and the Nifty50 ended 11.20 points up.

On Wednesday, stocks tumbled with investors tracking weak global cues and indulging in heavy selling right through the session. A select few blue chips, and some stocks from the midcap and smallcap segments managed to buck the trend, but the overall mood was so bearish that the key indices ended the day with sharp losses.

Fears about U.S. interest rates, disappointing trade data out of China and forecasts by analysts of some leading fund houses about more downside for U.S. stocks rendered the mood bearish. Selling gained momentum past mid afternoon after European markets opened on a highly negative note. The rupee's weakness against the U.S. dollar and investors' reluctance to pick up stocks ahead of inflation data and quarterly results from India Inc too contributed to market's decline. The Sensex ended down 439.23 points on that session and the Nifty50 declined 135.45 points.

On Friday, the market was listless right through the session, with investors, digesting quarterly reports from IT majors Infosys and Tata Consultancy Services and data on consumer price and wholesale price inflation, appearing somewhat clueless about the direction despite positive global cues. The Sensex ended up 30.49 points and the Nifty50 gained 10.05 points.

From the Sensex, ONGC, Cipla and GAIL India moved up 3% - 4%. Asian Paints gained nearly 2%. Capital goods sector heavyweight Larsen & Toubro gained 1.3%, thanks to the company's construction division bagging a big order from the railways.

Hindustan Unilever ended lower by more  than 4% after the company's parent Uniliver reported disappointing quarterly results and said volumes growth outlook for the Indian company in the second half of the current financial year appears weak.

Housing finance major HDFC lost more than 6%. Adani Ports and Bharti Airtel shed 4.7% and 4.4%, respectively. Reliance Industries ended 2.8% down.

Infosys ended the week with a gain of about 1.5%, despite seeing some heavy selling on Friday after the company lowered its earnings outlook for the current fiscal. The stock declined to a 52-week low after the company lowered its guidance for financial year 2017, despite reporting a 5% growth in second quarter net profit. The stock, which rose to rs 1080.70 early on in the session, ended the day with a loss of 2.4% at Rs 1026.50.

Infosys lowered its sales growth forecast for financial year 2016-17 to 7.5% - 8.5% in dollar terms. The IT major reported a net profit of Rs 3606 crore for the quarter ended September 2016, beating market expectations. That was up 4.95%, compared to the company's net profit of Rs 3436 crore in the quarter ended June 2016. On standalone basis, Infosys posted a net profit of Rs 3476 crore for the quarter ended September 30, 2016 as compared to Rs 3248 crore for the quarter ended September 30, 2015.

Tata Consultancy Services closed flat. The company reported consolidated net profit of Rs 6603 crore for the quarter ended September 30, 2016 as compared to Rs 6093 crore for the quarter ended September 30, 2015. Total income increased from Rs 27,848 crore for the quarter ended September 30, 2015 to Rs 30,341 crore for the quarter ended September 30, 2016.

Among bank stocks, State Bank of India and Axis Bank shed about 2.4% each and HDFC Bank declined 1.2%. ICICI Bank ended 3.4% down. Several other stocks from PSU and private sector banking sections also closed lower despite seeing some support here and there.

In the automobile space, Mahindra & Mahindra declined 1.2% and Tata Motors shed 1.8%.

On the economic front, data released by the government on Friday showed India's annual rate of inflation based on wholesale prices to have eased on a month-on-month basis to 3.57% in September from 3.74% in August.

During the corresponding period last year, wholesale price inflation stood at -4.59%. After contracting for seventeen straight months, wholesale price inflation rose in April this year.

On Thursday, the government had released the data on retail price inflation. The data showed India's consumer price inflation to have slowed more than expected in September, advancing 4.31% (year-on-year), compared to 5.05% in August. In September 2015, inflation was 4.41%. While prices of food and beverages rose 4.12% annually and those of clothing and footware increased 5.19%, housing costs were up 5.18% and fuel prices increased 3.07%.

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