Market slides for 3rd straight week

The market declined for the third consecutive week as weak global stocks continue to spook investors. A weakening trend in global markets on lingering concerns over the euro zone debt crisis dampened the trading sentiment here. Selling was also triggered by poor Q2 September 2011 corporate earnings. Data showing selling by foreign funds recently also concerned investors.

The BSE Sensex slumped 821.31 points or 4.78% to 16,371.51 in the week ended Friday, 18 November 2011. The 50-share S&P CNX Nifty fell 263 points or 5.09% to 4,905.80.



The BSE Mid-Cap index fell 7.24% while the BSE Small-Cap index fell 8.61%. Both these indices underperformed the Sensex.

Corporate earnings have been weak. The combined net profit of a total of 3,729 companies declined 35.9% to Rs 67529 crore on 20.6% growth in sales to Rs 1135564 crore in Q2 September 2011 over Q2 September 2010. The Q2 earnings season got over on Tuesday, 15 November 2011.

Data showing selling by foreign funds recently also weighed on sentiment. Foreign institutional investors (FIIs) sold shares worth Rs 195.20 crore on Thursday, 17 November 2011, as per the provisional data from the stock exchanges. Their outflow totaled Rs 1093.86 crore in three trading session from 15 to 17 November 2011.

Trading for the week began on a sluggish note. Key benchmark indices fell for the third straight day on Monday, 14 November 2011, as the latest data showed that inflation remains uncomfortably high. The BSE Sensex lost 74.08 points or 0.43% to settle at 17,118.74. The S&P CNX Nifty lost 20.50 points or 0.4% to settle at 5,148.35.

Key benchmark indices fell for the fourth straight day on Tuesday, 15 November 2011 as world stocks fell amid renewed worries about euro-zone debt. The BSE Sensex lost 236.07 points or 1.38% to settle at 16,882.67. The S&P CNX Nifty shed 79.85 points or 1.55% to settle at 5,068.50.

Key benchmark indices fell for the fifth straight day on Wednesday, 16 November 2011 on weak Q2 September 2011 corporate earnings. The BSE Sensex lost 106.80 points or 0.63% to settle at 16,775.87. The S&P CNX Nifty shed 38.05 points or 0.75% to settle at 5,030.45.

Key benchmark indices fell for the sixth straight day on Thursday, 17 November 2011 as European stocks declined. The BSE Sensex lost 314.16 points or 1.87% to settle at 16,461.71. The S&P CNX Nifty tumbled 95.70 points or 1.9% to settle at 4,934.75.

Key benchmark fell for the seventh straight day to hit six-week closing low on Friday, 18 November 2011 as weak global stocks and poor Q2 September 2011 earnings dampened sentiment. The BSE Sensex lost 90.20 points or 0.55% to settle at 16,371.51. The S&P CNX Nifty tumbled 28.95 points or 0.59% to settle at 4,905.80.

Among the 30 Sensex shares, 27 declined and only three shares gained.

Infrastructure company Jaiprakash Associates was the biggest Sensex loser last week. The stock tumbled 18.16% to Rs 62.20 due to weak Q2 operating performance. Net profit rose 11% to Rs 128.65 crore on 2% growth in net sales to Rs 3132.41 crore in Q2 September 2011 over Q2 September 2010. A sharp surge in other income and a decline in tax rate to 42% from 60% boosted bottom line. The core operating profit margin declined 80 basis points to 23.9%, mainly due to increase in employee costs.

India's largest power equipment maker by sales Bhel dropped 14.86% to Rs 275.95. The company announced after market hours on Monday, 14 November 2011 that net profit rose 23.61% to Rs 1412 crore on 24.41% growth in total income to Rs 10765.37 crore in Q2 September 2011 over Q2 September 2010.

The growth in both topline and bottomline was despite a 60 basis point drop in operating margin to 18.6% due largely on account of higher other income and lower tax incidence. In addition, the company during the quarter has changed its policy of accounting leave encashment to 30 days a month (earlier 26 days a month) and thus the profit before tax was escalated to the extent of Rs 166 crore. But for this one item which moderated the staff cost, the contraction in operating margin would have been higher

Bhel had order backlog of Rs 1.61 lakh crore as on 30 September 2011. Bhel has decided to set up a new power equipment fabrication plant in Bhandara district in Maharashtra.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 12% to Rs 737.80 as net profit fell 2.78% to Rs 737.38 crore on 34.75% increase in total income to Rs 7592.14 crore in Q2 September 2011 over Q2 September 2010. The result was announced early this week.

The company said during market hours on Thursday that consolidated net profit fell 2.69% to Rs 682 crore on 62.1% growth in gross revenue plus other income to Rs 15250.40 crore in Q2 September 2011 over Q2 September 2010. The figures are not strictly comparable as Q2 September 2010 results do not include results of Ssangyong Motor Company and its subsidiaries and share in PAT of Satyam Computer Services. On a comparable basis, net profit rose 5.1% to Rs 682 crore on 29.6% growth in revenue to Rs 15250.40 crore in Q2 September 2011 over Q2 September 2010, M&M said in a statement.

M&M and Telephonics Corp, a unit of US-based Griffon Corp, on Thursday, 17 November 2011, signed an initial agreement to form a joint venture to build airborne radar systems in India. The two companies said also that they have sought approval from the Indian government's foreign investment promotion board for the joint venture.

India's largest car maker by sales Maruti Suzuki India fell 11.19% to Rs 940.70. Maruti had clarified recently that the decision to purchase land in Gujarat is towards building additional capacity. It had also said that the board of directors approved the purchase of land in Gujarat for future capacity requirements of the company. The logistics for reaching the finished cars to the large domestic markets in West and South India and the close proximity of the Mundra port for future exports, played an important role in the decision, Maruti said.

Realty major DLF slipped 10.51% to Rs 204.35 on weak Q2 results. The company announced on Thursday, 10 November 2011, that consolidated net profit fell 10.98% to Rs 372.41 crore on 2.27% rise in total income to Rs 2577.16 crore in Q2 September 2011 over Q2 September 2010.

DLF said it expects second half of the year ending March 2012 (FY 2012) to witness a stronger operational performance, both in terms of a scale up in launches in the plotted and group housing segments and deliveries of its projects across the cities of Gurgaon, Chennai and Cochin. DLF also expects the momentum on the non-core divestment plan to continue with increasing traction in the proposed divestment of its hospitality assets which would further help in moderation of its debt levels. With strategic capital expenditures being undertaken on improving the quality of its land bank and the build out of select commercial and infrastructure assets, the company is well positioned to capitalize on the growth opportunities as and when the demand scenario revives, DLF said in a statement.

DLF said that the Competition Appellate Tribunal has on 9 November 2011 issued a stay order on the demand on penalty and kept in abeyance the directions relating to modifications of conditions. This pertains to the order passed by the Competition Commission of India dated 12 the August 2011. While this is an interim order, the company believes that it has a strong case based on merits, DLF said. It may be recalled that the Competition Commission of India had imposed a Rs 630-crore penalty on the country's biggest property developer by sales in August as it found the company abusing its marker leadership position to the disadvantage of residents at a housing complex.

India's largest steel maker by sales Tata Steel fell 8.72% to Rs 392.50 after consolidated net profit fell 89.26% to Rs 212.43 crore on 11.73% rise in total income to Rs 32918.33 crore in Q2 September 2011 over Q2 September 2010.

Tata Steel said its performance was adversely impacted by higher global raw materials costs and lower average selling prices at Tata Steel Europe. Tata Steel's net debt at the end of September 2011 stood at Rs 45056 crore, compared to Rs 46627 crore at the end of March 2011.

Index heavyweight Reliance Industries (RIL) fell 8.58% to Rs 808.05. RIL's unit Infotel Broadband Services recently acquired a 38.5% stake in privately held digital learning firm Extramarks Education. It did not disclose the financial details of the investment. The deal will help Extramarks develop its digital distribution services and expand market penetration, RIL said. Last year, Reliance acquired Infotel Broadband, the only company to win a nationwide licence for broadband wireless spectrum in a government auction, for $1 billion, marking its return to the telecom business.

India's largest private sector bank by net profit ICICI Bank fell 6.36% to Rs 770.15. ICICI Bank's consolidated net profit rose 43% to Rs 1992 crore in Q2 September 2011 over Q2 September 2010. Standalone profit after tax increased 22% to Rs 1503 crore in Q2 September 2011 over Q2 September 2010. Net interest income increased 14% to Rs 2506 crore in Q2 September 2011 over Q2 September 2010. Fee income increased 7% to Rs 1700 crore in Q2 September 2011 over Q2 September 2010. Provisions decreased 50% to Rs 319 crore in Q2 September 2011 over Q2 September 2010. The result was announced during trading hours on Monday, 31 October 2011.

ICICI Bank's current and savings account (CASA) ratio stood at 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.8% as at 30 September 2011 from 1.37% as at 30 September 2010 and 0.91% as at 30 June 2011.

Drug maker Cipla was the top Sensex gainer last week. The stock jumped 9.42% to Rs 313.75 on good Q2 results. Net profit rose 17.47% to Rs 308.97 crore on 9.8% growth in income from operations to Rs 1804.28 crore in Q2 September 2011 over Q2 September 2010.

India's largest listed telecom operator by sales Bharti Airtel rose 0.54% to Rs 397.65. The stock will be added in the MSCI Emerging Markets Index with effect from 1 December 2011.

India's largest motorcycle maker by sales Hero MotoCorp rose 0.49% to Rs 2,184.15. Early this month, Hero MotoCorp reported 1.3% growth in its October sales at 5.12 lakh units. The company had sold 5.05 lakh units in the corresponding month last year.