Weekly Wrap: Sensex, Nifty post moderate losses on geopolitical

Weekly Wrap: Sensex, Nifty post moderate losses on geopolitical worries

Last Updated: Sat, Aug 09, 2014 16:54 hrs

Weakness in global markets amid mounting geopolical worries due to escalating tensions in Ukraine, Iraq and Libya, and a depreciating rupee hurt sentiment and triggered a few rounds of heavy selling on the Indian bourses during the week ended 8 August 2014.

Global markets saw some heavy selling during the later part of the week after the U.S. President Barack Obama authorized targeted airstrike on Iraq to halt the advance of Islamic militants.

Recording losses on three of the five sessions, the Sensex ended the week lower by 151.70 points or 0.6% at 25,329.14. The Nifty closed down 34.05 points or 0.45% at 7568.55. With a number of midcap and smallcap stocks too seeing some weak spells, the BSE Midcap and Smallcap indices declined by 1.7% and 0.6%, respectively.

The market started the week on a buoyant note, with investors going in for some bargain hunting after previous week's sharp losses. A recovery in Asian and European markets too contributed to the upmove. The Sensex ended up 242 points, while the Nifty closed higher by about 81 points that day.

The market ended higher on Tuesday as well, after the Reserve Bank of India held key policy rates unchanged. The Sensex, after wild swings, ended the session with a gain of about 185 points, while the Nifty moved up by around 63 points.

Unveiling the third bi-monthly monetary policy for the financial year 2014-2015 on Tuesday, the Reserve Bank of India left the Repo rate unchanged at 8%. The CRR too was maintained at 4%, while the Statutory Liquidity Ratio (SLR) was reducted by 50 basis points.

The RBI said it will continue to monitor inflation and that it was committed to reach the 8% inflation target by January 2015 and 6% by January 2016. The central bank said it was premature to discount food inflation pressures and that monsoon fears still persisted.

The central bank, which expects aggregate demand to pick up once consumer and business confidence improves, is of the view that a 5% - 6% growth is sustainable.

The market ended notably lower on Wednesday, as investors indulged in some heavy selling almost right through the session, amid worries about escalating tensions in Ukraine and the Middle East.

A sell-off in European markets rendered the mood quite bearish in late afternoon trade. The Sensex lost 243 points and the Nifty declined by about 75 points in that session.

On Thursday, stocks edged lower, after looking for direction for much of the trading session. Caution ahead of the European Central Bank's monetary policy and geopolitical concerns rendered prive movements quite sluggish. While the Sensex declined 76 points on that day, the Nifty ended lower by 22.80 points.

Stocks posted sharp losses on Friday as tensions escalated in Ukraine and Iraq. With the U.S. President Barack Obama authorizing targeted airstrikes in Iraq, and the situation in Iraq and Ukraine remaining tense, global stocks drifted lower today, rendering the mood back home too quite bearish. The Sensex ended the day with a loss of 260 points, while the Nifty closed down 81 points.

Metal stocks were quite listless for most part of the week. Sector majors Sesa Sterlite and Tata Steel lost 5% and 2.1%, respectively. Coal India declined 1.2% after saying its production in July fell short of estimates. Hindalco fared relatively better, losing just about a quarter percent, thanks to a good show by its U.S. unit Novelic Inc in the first quarter.

Among bank stocks, State Bank of India ended lower by about 1%. State Bank of India announced its quarterly results on Friday. The PSU heavyweight reported a net profit of Rs 3349.08 crore for the quarter ended June 2014, up 3.33% from previous corresponding quarter. On a consolidated basis, the bank's net profit rose 3.48% to Rs 4448.15 crore on 15.46% rise in total income to Rs 60,620.93 crore in the April - June 2014 quarter, from the year ago period.

SBI's ratio of net non-performing assets to net advances stood at 2.66% as on 30 June 2014, compared with 2.57% as on 31 March 2014 and 2.83% as on 30 June 2013.

ICICI Bank and HDFC Bank lost 2.6% and 2.3%, respectively, while Axis Bank, the other bank major in the Sensex, ended the week with a loss of a little over 4%.

In the automobile space, Mahindra & Mahindra gained nearly 5%, despite reporting a near 6% decline in net profit for the quarter ended June 2014. Mahindra & Mahindra reported a drop in tractor sales in July. Domestic sales were down 8% in the month, although exports rose 47%.

Bajaj Auto gained a little over 3%, with strong sales data aiding its surge. Maruti Suzuki gained about 1.3% thanks to a sharp 21.7% increase in sales in July.

Tata Motors ended lower by 1.4% on disappointing sales data for July. Hero Motocorp too closed on the negative side, albeit with a marginal loss. Hero Motocorp reported a marginal 2.58% rise in net profit for the quarter ended June 2014.

Telecom stock Bharti Airtel declined 1.5%. The stock saw some strong buying on Friday after it succesfully completed the offer for sale of 8.5 crore shares of Bharti Infratel, for a consideration of over Rs 2100 crore.

Among IT stocks, Infosys, Hexware Technologies, Oracle Financial Services, Tech Mahindra and Wipro gained 2% - 5%. HCL Technologies ended modestly higher, while Tata Consultancy Services and Mphasis closed notably lower.

In the healthcare space, Wockhardt, Aurobindo Pharma, Strides Arcolab, Apollo Hospitals Enterprises and Dr Reddy's Laboratories closed with sharp to moderate gains, while IPCA Laboratories, Glenmark Pharmaceuticals, Cipla, Biocon, Sun Pharmaceutical Industries, Ranbaxy Laboratories and Lupin closed weak.

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