Market declines for 5th consecutive week

The market declined for the fifth week in a row due to uninspiring budgetary proposals and weak global markets. Finance Minister Pranab Mukherjee unveiled Union Budget 2012-13 last Friday, 16 March 2012, which set only modest targets for trimming a ballooning fiscal deficit and there was lack of any big-bang reform announcement in the Budget, dampening investor sentiment.

The move by the railway minister on Thursday, 22 March 2012, to rollback some of the tough proposals in the Railway Budget due to populist demands also unnerved investors. The weakness of the Indian rupee against the US dollar also left investors jittery.



The Sensex fell 104.46 points or 0.60% to 17,361.74 in the week ended Friday, 23 March 2012. The S&P CNX Nifty fell 39.70 points or 0.74% to 5278.20.

The BSE Mid-Cap index outperformed the Sensex, falling 0.17%. The BSE Small-Cap index underperformed the Sensex, falling 1.17%.

Foreign institutional investors (FIIs) have made substantial purchases of Indian stocks recently. Their inflow totaled Rs 7296.02 crore in ten trading sessions from 9 to 22 March 2012, as per provisional data from the stock exchanges.

Trading for the week began on a weak note. Key benchmark indices fell for the third straight day on Monday, 19 March 2012, to reach their lowest closing level in more than a week and a half as European stocks edged lower. The BSE Sensex was down 192.83 points or 1.1% to 17,273.37. The S&P CNX Nifty was down 60.85 points or 1.14% to 5,257.05.

Key benchmark indices eked out small gains, snapping a three-day losing streak on Tuesday, 20 March 2012. The BSE Sensex was up 42.81 points or 0.25% to settle at 17,316.18. The S&P CNX Nifty was up 17.80 points or 0.34% to 5,274.85.

Key benchmark indices edged higher to hit highest closing level in nearly one week on Wednesday, 21 March 2012, on firm European stocks and as US index futures gained. The BSE Sensex was up 285.53 points or 1.65% to 17,601.71. The S&P CNX Nifty was up 90.10 points or 1.71% to 5,364.95.

Key benchmark indices slumped to hit their lowest level in more than two weeks on Thursday, 22 March 2012, as the parliament was rocked following reports of an alleged coal scam to the tune of Rs 10.67 lakh crore. The BSE Sensex shed 405.24 points or 2.3% to settle at 17,196.47. The S&P CNX Nifty lost 136.50 points or 2.54% to settle at 5,228.45.

Key benchmark indices edged higher on Friday, 23 March 2012, amid high volatility as bargain hunting emerged after Thursday's 2.3% fall after the Comptroller and Auditor General (CAG) quashed reports of losses to the exchequer from government's coal block allocations policy. The BSE Sensex rose 165.27 points or 0.96% to 17,361.74. The S&P CNX Nifty rose 49.75 points or 0.95% to 5,278.20.

Among 30-Sensex shares, 20 declined and the remaining rose.

Steel makers like Jindal Steel & Power (down 6.80% to Rs 536.15) and Tata Steel (down 1.18% to Rs 449), declined after a newspaper report on Thursday (22 March 2012) said, citing a draft Comptroller and Auditor General (CAG) report, that companies from steel sector, among others, got undue benefit from allocation of coal fields without auction between 2004 and 2009. Coal is a key raw material for steel industry.

The UPA government appeared to stave off a fresh crisis on Thursday (22 March 2012) after the national auditor played down suggestions of a Rs 10.67-lakh crore revenue loss to the exchequer due to faulty allocation of coal mining blocks. A leaked draft report of the Comptroller and Auditor General (CAG) alleged that by not auctioning mines allotted to private and state-run firms, the government may have engendered revenue losses of truly epic proportions dwarfing all previous scams. But the Prime Minister's Office sprang into action and released a letter from the auditor saying the information was half-baked and misleading. The contents of the draft, which covered allocation of coal blocks between 2004 and 2009, were reported by a leading newspaper in its Thursday edition. The story ignited an uproar in Parliament and hurt market sentiment.

India's largest commercial vehicle maker by sales Tata Motors fell 4.80% to Rs 272.95. The company's wholly-owned unit, Jaguar Land Rover, on Wednesday, 21 March 2012, finalised a joint venture (JV) agreement with Chery Automobile Co to manufacture and sell vehicles in China, as the luxury British brands look for further growth in the world's largest car market. The scope of the JV will include manufacture of JLR- and JV-branded vehicles; establishment of a research and development facility; engine manufacture; and sale of vehicles produced by the JV company. The financial details of the JV were not disclosed.

Tata Motors increased the prices of its commercial vehicles and passenger vehicles following hike in excise duty announced in Union Budget 2012-13 last week.

Small-car maker Maruti Suzuki India dropped 4.74% to Rs 1308.60 on report the newly-formed workers' union at its Manesar plant is demanding higher wages. The Manesar plant of the company has been struggling to bounce back after the prolonged labour unrest last year.

The government announced an across the board hike in excise duty for passenger vehicles in Union Budget 2012-13 last week.

Index heavyweight Reliance Industries (RIL) rose 3.62% to Rs 744. The government has reportedly approved RIL's $ 1.529 billion plan to produce over 10 million standard cubic meters per day of gas from four satellite fields in the flagging KG-D6 block. RIL and its partners, BP Plc of UK and Niko Resources of Canada are likely to start producing natural gas from the four fields around mid-2016, media reports quoted Minister of State for Petroleum and Natural Gas R P N Singh as saying on Thursday, 22 March 2012. The investment plan, which will help boost falling output in the Krishna-Godavari Basin KG-D6 block, has been pending with the authorities for two years.

India's largest power equipment maker by sales Bhel fell 2.72% to Rs 266.10. Bhel, which is affected by cheap imports of power equipment from Chinese and Korean markets, witnessed selling pressure because the Union Budget 2012-13 did not seek to create a level-playing field between Indian power equipments makers and their Chinese rivals.

Power plant equipment makers were anticipating that the government might impose an import duty of 14%-19% on mega/UMPP projects. A status quo on existing concessional import duty for mega and UMPP power projects means that domestic equipment makers who are augmenting their capacity continue to face strong competition in the domestic market.

On the other hand domestic power equipment maker were saddled further with 2% hike in excise duty and service tax. The little solace they could take is easing funding norms to power sector thereby addressing the fund crunch for the sector.

Hindalco Industries (down 6.23%), Tata Power (down 5.77%), State Bank of India (down 2.81%), Coal India (down 2.22%), ONGC (down 2.2%), L&T (down 1.33%) and Sterlite Industries (down 1.14%), edged lower from the Sensex pack.

Cigarette maker ITC rose 2.94% to Rs 222.45. The stock hit a record high of Rs 226.65 in intraday trade on Thursday, 22 March 2012. The Union Budget 2012-13 imposed an additional ad-valorem excise on cigarettes, while keeping the fixed rate structure constant. The additional levy is at the rate of 10% on 50% of retail selling price (MRP), which effectively works out to 5% of MRP. This additional levy is on cigarettes above 65 mm of length, which covers almost the entire cigarette portfolio of ITC. Analysts reckon that ITC may go for medication of length of some of its lower-end brands (reduce the length to sub-65mm) to avoid the additional levy on some part of its portfolio.

India's second largest software services exporter by revenue Infosys rose 0.15% to Rs 2870.35. The company on Thursday, 22 March 2012, said ING Belgium has selected Infosys' Finacle universal banking solution for core banking transformation. Infosys said that Finacle will power multiple lines of the bank's business including savings and current accounts, deposits and loans. With this transformation, ING will modernize services for its growing customer base in Belgium, deliver operational efficiencies, bring products to market faster and improve customer experience.

Sun Pharmaceuticals Industries (up 6.22%), Hindustan Unilever (up 3.28%), Hero MotoCorp (up 3.21%), Bharti Airtel (up 2.66%), M&M (up 1.74%), TCS (up 1.47%), HDFC Bank (up 1.21%) and GAIL (India) (up 1.04%), edged higher from the Sensex pack.