Indices retreat among macro worries, cap goods worst hit

Benchmark indices fell around 1.5 percent during the week amid low volumes as the market remained in the grip of a vacation hangover. The Sensex ended the week at 20851, and the Nifty at 6211.15, down 262 points and 102 points respectively over the previous week.

Much of the damage was done on Thursday, when the Sensex shed 252 points, and the Nifty 80 points, in a dramatic last hour reversal of trend. Brokers say the mood is a bit cautious because of continuing weakness in macroeconomic data, and reduced global liquidity because of the USD 10 billion cutback in the US Federal Reserve’s monthly bond purchases. Also, the AAP delivered on two of its key poll promises—free water and cheap power—and political pundits see the party as a major threat to BJP’s vote share in the upcoming general elections.

Also Read: See IT, pharma outperforming; optimistic on market, says Damani

In sectoral performance, capital goods, auto, banks, power, oil & gas, and metal shares were the big laggards, with the respective indices down 2-4.5 percent. In key developments, Cooper Tire called off its deal with Apollo Tyres, triggering a brief rally in shares of Apollo Tires.

Midcap realty shares rallied earlier in the week, but failed to sustain gains. The Cabinet approved Tesco’s and Vodafone’s investment proposals, while the RBI’s Financial Stability Report warned of a possible contagion if a large corporate defaulted on its bank loan.

In depressing news on the macro front, core sector growth dipped to 1.7 percent in November, fiscal deficit for the eight months of this fiscal reached 94 percent of the full year target and an HSBC Survey showed India’s manufacturing sector—as measured by the Purchasing Managers Index—shrinking in December to 50.7 from 51.3 in November. December automobile sales continued to weaken, with commercial vehicles suffering the most.

The Prime Minister’s press conference on Friday did not affect market sentiment either way, though there are concerns that the UPA government may try to push through a populist measure or two just ahead of the elections.

TCS, Lupin and Ranbaxy were the key Nifty gainers during the week, rising around 3 percent each. ONGC, L&T, Tata Power, BPCL and M&M were the big losers, shedding 6-7 percent. While the CNX Midcap index ended down for the week, there were plenty of big gainers individually.

MCX shares rallied on hopes that a strategic investor would be shortly picking up stake in the company, now that Financial Technologies will most probably have to reduce its stake in the commodity bourse. Financial Technologies too was a big gainer, up 30 percent for the week though long term concerns over its business model linger.

Gati shares gained over 30 percent during the week. Dalal Street’s famed investor duo Rakesh Jhunjhunwala and RK Damani have been accumulating the shares over the last couple of weeks, and now own over 5 percent in the company.

Other gainers included Transport Corporation of India (+40 percent), Cox & Kings (+30 percent), Orbit Corp(+23 percent), IL&FS Engineering(+20 percent), and Tata Tele (Mah) (+17 percent).