Markets decline for 3rd straight week

Mounting fears over the health of global economy hampered investor sentiment this week. The Sensex falls 2.69% and the Nifty slips 2.65%.

Major headlines for the week

June IIP at 8.8% versus 5.6%

Food inflation at 9.9% versus 8.04%

Tata Motors Q1 consolidated net profit at Rs2,000 crore

L&T Q1 net profit up 12%

M&M net profit rises 8% in Q1



Indian indices

The week saw markets falling in four out of five sessions. Global worried kept the investors nervous all throughout this week. Last week, the global rating agency Standard and Poor’s (S&P) downgraded US sovereign debt rating to ‘AA+’ from ‘AAA’. The US lost its 'AAA' credit rating for the first time in history and this raised concerns of continuing turmoil in global financial markets. Escalating euro zone debt crisis and US growth worries dragged the Indian markets lower for the third week in a row. Also, higher food inflation data worried market participants.

During the week, the US Federal Reserve decided to keep the interest rates unchanged near zero for two more years, which provide some relief. Positive news back home, index of industrial production ( IIP) data came in higher-than-expected at 8.8%.

The Sensex swung 824 points between a weekly high of 17256 and low of 16432 and closed the week 2.69% lower or 466 points at 16840. The Nifty swung 258 points between a weekly high of 5204 and low of 4946 and closed the week 2.65% lower or 138 points at 5073.

Global indices

The US and European debt crisis led to sell-off across the world. All the global markets closed the week with heavy losses. Dax 100 was the biggest loser of the week falling by 7.03%, followed by Hang Seng down by 6.33% and CAC 40 dropped by 5.76%.

Sectoral and stock screening

Except BSE Auto which was up by 2.67%, all the sectors ended the week in the red zone. Major losers were BSE IT down by 8.32% and BSE TECk down by 7.49%, as both the sectors plunged due to US growth woes. BSE Metal fell by 5.83% and BSE Realty lost by 4.30%. Rest all the sectors fell in the range of 1-3%.

Coming to 'A' group stocks, top three gainers of the week were RCF up by 14.64%, M&M gained by 13.02% and Chambal Fertilisers rose by 12.22%. Top three losers of the week were Suzlon Energy lost by 14.81%, Jet Airways slid by 13.98% and SKS Microfinance declined by 13.93%.

FII/MF activity

Foreign institutional investors (FII) were the net sellers for the second consecutive week and sold Indian shares to the tune of Rs4,337.10 crore this week as compared to the net sell of Rs1,492.3 crore seen in the previous week. The domestic investors were the net buyers for the second straight week and bought Indian shares worth a net of Rs1,298.5 crore this week as compared to the net buy of Rs265.6 crore seen in the previous week.

Outlook

With Q1 June 2011 results over, Indian shares will take cues from global markets. A recent correction in commodity prices, including that of oil and metals augurs well for Indian manufacturing firms and also the government in reining in oil subsidy burden. Lower commodity prices may also help rein in high inflation.

Next week is a truncated trading week. The stock market remains closed on Monday (August 15 2011), on account of Independence Day.