Weekly Wrap: Sensex tumbles nearly 3% on growth concerns

Weekly Wrap: Sensex tumbles nearly 3% on growth concerns

Last Updated: Sat, Aug 03, 2013 08:03 hrs
BSE Sensex seen opening lower, GDP data eyed

The Reserve Bank of India's decision to keep policy rates unchanged and the recent monetary tightening moves to curb the rupee's slide rendered the mood bearish on the Indian bourses last week.

Recording losses on all the five sessions, the BSE benchmark Sensex ended the week with a loss of around 584 points or almost 3% at 19,164. The National Stock Exchange's Nifty closed down 208 points or 3.5% at 5678. Midcap and smallcap stocks were battered too. The BSE Midcap and Smallcap indices lost over 6%, mirroring widespread selling.

The market started the week on a negative note, extending previous week's losses, with investors staying wary of building up positions ahead of the Reserve Bank of India's monetary policy statement. Some weak quarterly results from India Inc. and a negative close in most of the markets across the Asian region amid lingering worries about near term economic outlook, too hurt sentiment to a notable extent. The Sensex ended lower by around 155 points that day, while the Nifty closed 55 points down.

The stock market extended its losses to a sixth successive session on Tuesday, as investors indulged in some heavy selling across the board, after the Reserve Bank of India cut GDP growth forecast for fiscal 2013-2014 to 5.5% from the earlier forecast for a growth of 5.7%.

The central bank left the repo rate and CRR unchanged at 7.25% and 4%, respectively and said liquidity tightening measures announced recently will be rolled back once stability returned to the currency market. The Sensex ended the day with a loss of 245 points and the Nifty closed lower by about 77 points.

On Wednesday, the market ended marginally down, despite staging a fairly strong recovery in late afternoon trade. While a subdued trend in Asian markets set up a weak start, stocks widened their losses after the rupee tumbled to 61.17 against the U.S. dollar.

The Sensex, which went down by nearly 230 points at one stage, ended the day with a small loss of 2.64 points, while the Nifty closed lower by 13 points.

Despite opening on a buoyant note on positive global cues and on some hectic bargain hunting after recent losses, the market switched track and ended lower on Thursday, extending its losing streak to a seventh successive day.

Worries about near term economic outlook, some rating downgrades for Indian stocks, weak monthly sales data from a couple of automobile manufacturers and the sharp plunge of Financial Technologies, all weighed on sentiment in equal measure. While the Sensex closed lower by 29 points, the Nifty edged down by 14 points in that session.

The market declined sharply on Friday, as lingering worries about near term growth outlook prompted investors to press sales, even as global cues were quite positive on the back of some upbeat economic data from the U.S.

The recent monetary tightening moves by the Reserve Bank of India to arrest the rupee's slide and the governor's statement that these measures would be rolled back only after stability is restored in the forex market proved strong enough reasons for investors to get out of counters. While the Sensex closed with a loss of over 150 points, the Nifty lost around 50 points.

Among Sensex stocks, only six stocks managed to eke out gains last week.

Metal, realty and bank stocks were among the worst hit. FMCG, capital goods and oil stocks too mostly ended notably lower on sustained selling pressure.

Coal India ended nearly 10% down. The stock declined sharply on the final session after it failed to meet production target in July. Taa Steel lost over 7%, Hindalco ended lower by a little over 8%, Sterlite Industries declined by about 5.5% and Jindal Steel & Power lost 1.6% although it saw some bright spells following the company reporting a surge in net profit in the April - June 2013 quarter.

Shares of PSU power equipment maker BHEL closed nearly 6% down.

FMCG majors ITC (down 9.6%) and Hindustan Unilever (down 7.2%) declined sharply. Reliance Industries lost over 3.5%, GAIL India shed 4.5%, NTPC lost 8% and Tata Power ended lower by over 5% and banking sector heavyweights HDFC Bank (down 2%), ICICI Bank (down 4.8%) and State Bank of India (down 4.7%)

Among automobile stocks, Bajaj Auto lost nearly 6% following a weak sales report for July. Mahindra & Mahindra (down 4.3%) too declined on lower vehicles sales. Tata Motors scored a modest gain.

Upbeat U.S. economic data and the weakening rupee lifted information technology stocks. Strong results from Wipro and HCL Technologies too aided their surge. Wipro shot up by over 14%, Infosys gained over 3% and Tata Consultancy Services moved up by about 4.2%. Telecom stock Bharti Airtel gained over 2% on fairly impressive results.

Financial Technologies ended with a staggering loss of 66% on Thursday and had another weak outing on Friday as well, losing around 21%. The stock plummeted following the National Spot Exchange suspending trading of all one-day forward contracts following recent regulatory changes. The suspension of trading in one-day forward contracts come after a series of other steps taken by the exchange, which is promoted by FTIL and National Agricultural Cooperative Marketing Federation of India, in order to comply with regulatory requirements.

Shares of MCX, another Financial Technologies entity, plunged sharply and hit the 20% lower circuit on Thursday and Friday. Adani Enterprises tumbled sharply and ended lower by over 10% on Friday, amid reports that one of its group companies Adani Agro has an exposure of Rs 325 crore in castor seeds contracts on the National Spot Exchange Ltd, the bourse owned by Financial Technologies.

Meanwhile, the market regulator Sebi has begun a probe into a major crash in the share prices of commodity bourse MCX and its promoter Financial Technologies and has sought information from stock exchanges in this regard.

On the economic front, in a move to boost sagging exports which declined 4.6%, the Union Commerce Minister Anand Sharma announced a number of measures, including an increase in interest subvention rate to 3% from 2% and penetrating it deeper to include new sectors like handloom, handicraft, toys, carperts, sports goods, processed food, readymade garments, 200 tariff line in engineering sector and textile sector.

India's manufacturing activity almost stalled in July, according to a report released today. The HSBC India purchasing managers' index manufacturing stood at 50.1 points in July, after inching up to 50.3 in June. Output fell for the third consecutive month in July due to declining new orders, tough economic conditions and raw material shortages.

On Thursday (1 August), the Union Cabinet approved proposals to relax foreign-investment rules in a number of sectors including telecommunications, multibrand retail and defence.

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