Moneycontrol Bureau
The market saw biggest weekly loss in last six weeks on profit booking just after celebrating Diwali at a record high of 21,321.53 on the Sensex. Weak rupee and Fed tapering fears too caused selling pressure during the truncated week.
The Sensex slipped 530.66 points or 2.50 percent to close the truncated week below the 21,000-mark at 20,666.15 and the Nifty fell 166.45 points or 2.64 percent to 6,140.75.
Experts believe the pre-election rally is over now. The current correction, which is healthy for the market, may continue for a while due to global factors. However, it may not drag the Nifty below 6000-level as it is a strong support for the time being, they add.
“A lot of it has to do with the global factors playing a role. Markets took the cue that maybe
Fed will start tapering a bit sooner than expected. So that to some extent has spilled over,” Leif Eskesen, Chief Economist for India and ASEAN at HSBC said.
Andrew Holland, CEO, Ambit Investment Advisors Private feels the US and Europe are now showing reasonable signs of recovery and the Fed is likely to taper QE by December-January.
Holland is cautious on the Indian market with a short-term perspective, but believes that market will not fall significantly from hereon. He expects the Nifty to find support at 6000 level.
Meanwhile, not only the rupee but other currencies saw depreciation against the US dollar on fears that strong third quarter US GDP data and non-farm payrolls data may signal early tapering of fiscal stimulus.
The rupee touched a five-week low during the week, losing 1.2 percent to close at 61.74 per dollar while euro fell to 1.33 from 1.39 against the US dollar.
"We are likely to see the rupee depreciating to 63.5-64.5/USD and given that possibility buying from foreign institutional investors (FIIs) side is likely to remain muted into the market," Deven Choksey, managing director of KR Choksey Shares and Securities said.
The inflow of foreign money was also the lowest in last one-month as foreign institutional investors bought worth Rs 1,361 crore worth of shares this week. In last one-month, they purchased around Rs 16,500 crore worth of shares.
During the week, the market saw some signs of rebound but S&P warning killed the recovery. Rating agency Standard & Poor's affirmed its rating on India at BBB-/A-3, but warned outlook is negative, citing marked slowdown in real growth.
The rating agency also warned that it may lower rating post elections if the government fails to revive growth.
On the sector specific action, financials saw major selling this week with the BSE Bank Index falling more than 6 percent followed by Oil & Gas and FMCG with 3 percent loss. However, IT Index outperformed with 1.5 percent gains.
Bank of Baroda lost the most among frontliners, shedding more than 10 percent. Punjab National Bank crashed 8.5 percent as its
second quarter net profit fell 52.6 percent year-on-year to Rs 505.5 crore - the lowest in last six years, dented by higher provisions on depreciation in investment.
State Bank of India declined 7 percent ahead of September quarter earnings next week. Analysts expect the profit to decline in the quarter gone by while asset quality and provisions of the top lender will be closely watched.
Other losers were Axis Bank, ICICI Bank, Bharti Airtel, BHEL, HDFC and M&M, which lost between 5-8 percent.
However, Tata Steel gained 6 percent ahead of quarterly earnings next week. Analysts expect good earnings from the company following strong quarterly performance reported by world’s largest steelmaker Arcelor Mittal.
Watch out for some important earnings like SBI, Tata Steel, Sun Pharma, M&M, Hindalco Industries and Cipla. Anil Dhirubhai Group companies (Reliance Infrastructure, Reliance Power and Reliance Capital) and PSU oil & gas companies (ONGC, Oil India, BPCL and HPCL) will also declare earnings.
In case of reaction to earnings, Tata Motors will be big in the coming week. India’s largest commercial vehicle maker (on Friday after market hours) reported
71 percent year-on-year profit growth in second quarter on the back of Jaguar Land Rover (JLR) boost. However, standalone (domestic) business continued posting losses amid weak economic environment.
The bigger positive factor was the JLR margin that expanded 300 basis points - far better than analysts’ expectations to 17.8 percent in the quarter gone by.
GE Shipping and Divis Labs may also react strongly to earnings as their second quarter net profit doubled compared to a year ago period.
Apart from earnings, watch out for economic data indicators as well like industrial output data for September, trade deficit for October and CPI and WPI inflation for the month gone by.
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Posted by Sunil Shankar Matkar)
