Week that was: Mute sentiment on earnings, growth concern

Moneycontrol Bureau

Equity benchmarks declined week-on-week as concerns over deficient monsoon, weak earnings and a fluid global market kept buyers on the backfoot. The BSE Sensex shed 208 points over last week to close at 17,213.70, and the Nifty fell 90 points to close at 5,227.25.

Heavyweights like Infosys, TCS, HDFC and HDFC Bank reported their first quarter numbers and a cautious market tried to price in gains. Though, the industrial output data improved marginally, growth concerns still plague the economy. Hopes of a rate cut and policy action from the government now seems to be the last silver lining in an otherwise cloudy sky. The market is eagerly awaiting the June inflation data, to be released on Monday, which will be a key input for RBI's next move on interest rates.
                                                                                        
Here is quick look at the key events that made news.

Earnings season kicks in: The earnings season began on a gloomy note as tech bellwether Infosys reported weak first quarter and cut its FY13 revenue guidance. While analysts were busy debating the reasons for Infosys' falling performance, TCS came up with better than expected results, making Infosys' performance appear even worse.

On the back of a robust loan growth, India's largest housing finance company HDFC reported first quarter earnings in line with analysts' expectations. HDFC Bank and IndusInd Bank too posted net profits of nearly 31% in the first quarter of FY13, reaffirming experts' belief of a good performance from the banking sector this quarter. 

Slow banking growth in June: Muted economic growth prospects resulted in low corporate borrowings leading to marginal growth of the banking sector in June. It also added fuel to concerns of not being able to meet the RBI’s yearly projections.

May IIP at 2.4%: Growth in core sectors drove the Index of Industrial Production (IIP) marginally higher to 2.4%, against negative 0.9% in April. However, growth in major sectors like capital goods, mining, manufacturing, electricity, basic goods and consumer goods was lower compared to the previous month.

RBI's pre-policy meet: Ahead of the monetary policy review on July 31, heads of private, public sector and even foreign banks met the RBI Deputy Governor, Subir Gokarn to place their demands for a 25 to 50 basis point cut in cash reserve ratio (CRR) and repo rate. While some bankers are in favour of boosting growth with a repo rate cut, others are trying to increase liquidity with a CRR cut.

SIAM cuts auto sales forecast: Of late the auto sector has been in the grips of a slowdown amidst rising fuel prices and expensive loans. Auto industry body, Society of Indian Auto Manufacturers (SIAM) acknowledged the fact and cut its passenger car sales growth forecast to 9-11% for FY13 against its 10-12% prediction.

GAAR guidelines by September 30: Within a fortnight of the Finance Ministry issuing draft guidelines on GAAR, Prime Minister Manmohan Singh set up a committee to prepare fresh norms on the controversial tax provision and create a roadmap by September 30 for its implementation. The four-member committee will be headed by ICRIER chief and taxation expert Parthasarathi Shome.

Shabnam Mondal

shabnam.mondal@network18online.com