The market saw some weak spells during the truncated week (7-11 November 2011) with concerns about the financial situation in Europe, weak economic data and some disappointing results prompting investors to indulge in some selling.
While the BSE benchmark Sensex ended the week with a loss of around 370 points or 2.1% at 17,193, the broader 50-stock Nifty index of the National Stock Exchange closed down 115 points or 2.2% at 5169. With several midcap and smallcap stocks too drifting lower, the Midcap and Smalllcap barometers lost 2.2% and 2.8% respectively. Among the sectoral indices, the Bankex, Capital Goods and Metal indices lost 4.8% - 5.5% last week.
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As continued uncertainty about the rescue act in the Euro Zone forced investors to mostly stay on the sidelines on Tuesday - the market was closed on Monday on account of Bakrid - stocks moved sideways amid lackluster trades and the benchmark indices Sensex and Nifty ended flat.
Worries about European economy following rating downgrades on Italy and Spain and the ongoing crisis in Greece triggered some heavy selling on Wednesday and pushed the Sensex and Nifty down by 207 points and 68 points respectively to their lowest closing levels since 26 October 2011 (Muhurat Trading session).
And then, after a holiday on Thursday on account of Gurunanak Jayanti, there were more pains for the market on Friday. This time around, weak industrial production data and disappointing results from Tata Steel, Hindalco, DLF and a few more top notch firms, forced investors to lighten commitments. Though a rally in European markets and higher U.S. index futurers pulled Indian stocks out of their lows, the market still ended the session on a highly negative note, with the Sensex and the Nifty losing 169 points and 52 points respectively.
Bank stocks turned in a weak performance during the week. A surge in non-performing assets of State Bank of India and Moody's downgrade of the Indian banking sector took the wind out of bank stocks on Wednesday. Moody's Investors Service changed its outlook for India's banking system to negative from stable due to concerns that an increasingly challenging operating environment will adversely affect asset quality, capitalization, and profitability. However, the rating agency said it recognizes that Indian banks' stable customer deposit base and high level of government securities holdings provide them with a resilient funding and liquidity profile that buffer them against destabilizing shocks.
However, Standard & Poor's has upgraded its rating of the Indian banking sector, stating that domestic regulations are in line with international standards.
According to the data released by the government on Friday, India's industrial output grew at its slowest pace in two years in September. Production at factories, mines and utilities grew 1.9% from a year earlier in September, lower than an ownwardly revised 3.6% growth a month ago.
The manufacturing sector, which contributes about 80% to the overall index of industrial production output in Asia's third largest economy, grew an annual 2.1% in September. The mining sector saw a 6% contraction and the capital goods sector growth plunged 7 percent, while the consumer non-durables section growth declined 1.3%.
Meanwhile, India's food price index rose 11.81% and the fuel price index climbed 14.50% in the year to October 29. In the previous week, annual food and fuel inflation stood at 12.21% and 14.50%, respectively. The primary articles price index was up 11.43%, compared with an annual rise of 12.08% a week earlier.
State Bank of India lost around 8.5% last week with a surge in non-performing assets contributing significantly to the stock's decline. The PSU heavyweight's consolidated net profit rose 46.8% to Rs 3470.43 crore on 8.76% rise in total income to Rs 41249.08 crore in Q2 September 2011 over Q2 September 2010, but the NPA data hurt sentiment.
ICICI Bank lost a little over 7% and HDFC Bank, another big player in the banking space, ended the week with a loss of about 3.75%.
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Metal stocks had a weak outing last week. Tata Steel went down by over 8% following a sharp 89% decline in consolidated net profit to Rs 212.43 crore in the quarter ended 30 September 2011. Hindalco lost nearly 7.5% after the company warned about future earnings despite posting a 16% rise in net profit for the September quarter. Sterlite Industries and Jindal Steel also closed notably lower.
DLF drifted down by around 7.5% following a near 11% drop in net profit for the quarter ended 30 September 2011. Maruti Suzuki, ONGC, Larsen & Toubro and Jaiprakash Associates were among the other prominent losers during the week.
FMCG heavyweight Hindustan Unilever moved up by over 4.5% as investors went for defensive stocks. IT stocks found some support thanks to a weak rupee.