Weak week for markets; Key indices lose over 1%

The Indian markets wrapped trade for the week ended July 13, 2012 in red breaking five-weeks gaining trend. The Sensex ended the week getting a hit of 1.75% while the Nifty fell 1.54%. Major headlines for the week: Major scam unearthed by IB; Ketan Parekh banned RCom sets price range for Singapore IPO Car sales grow 8.3% in June, bikes 6.6% Earnings Season Shocker: Infosys disappoints; stock plunges 10% IIP for May at 2.4% vs 0.1% in April Indian Indices: After rallying sharply in the previous five-weeks, the Indian markets reversed the gaining trend by ending the week ended July 13 in red. Volatility ruled the markets this week on account of major events such as May IIP numbers and results of blue-chip companies. Markets ended three out of four trading sessions in red owing to selling pressure all across the board. The BSE Mid-Cap index fell 1.05% and the BSE Small Cap index slipped 1.25% this week. Both these indices outperformed the Sensex. The Sensex swung 450 points between a weekly high of 17631 and a low of 17181 to close the week 307 points lower or 1.75% at 17213. The Nifty swung 131 points between a weekly high of 5348 and a low of 5217 to close the week 81 points lower or 1.54% at 5235. Negative newsflow like the stock market scam, IT major- Infosys' disappointing earnings announcement, global cues kept the markets under pressure this week. Markets broke the 5-week winning streak this week and the next week too is packed with a lot of important events to watch. From the announcement of headline inflation data on Monday which will give a clear hint as to what the Reserve Bank of India's policy review on July 31 has in store to Presidential election and earnings of RIL, the coming week will be a busy one for the D-street. Major newsflow of the week:- 1: The Intelligence Bureau unearthed a major stock market scam involving big players such as rogue stockbroker Ketan Parekh and his associates Piyush Sampath and Raju Shah for manipulating markets this week. Ketan Parekh was ostensibly banned from trading on the bourses till 2017 by securities market regulator SEBI. 2: The Multi Commodity Stock Exchange (MCX-SX) got a go ahead from the regulator SEBI to launch equity trading on its platform from October. It would be the third national exchange after the BSE and National Stock Exchange (NSE) to host equity trading. 3: From the sector-specific highlights, an oil ministry source on July 12, 2012 said that India is likely to raise diesel prices after presidential polls on July 19, as the government attempts to cut the amount of money it pays out to keep prices lower. 4: Prime Minister Dr. Manmohan Singh approved the constitution of an expert committee on anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) to undertake stakeholder consultations and finalise the guidelines for GAAR. Important announcements of the week:- 1. Index of industrial production (IIP) for May 2012 improved to 2.4% as against negative 0.9% in the previous month. The government has revised its April output from 0.1% (provisional). Further, the growth in major sectors like capital goods and mining came in negative. 2. Car sales in India surged to an annual 8.3% in June, in what was the eighth straight monthly rise but below industry expectations as a hike in excise tax has crimped demand. While looking to its forecast Society of Indian Automobile Manufacturers (SIAM) had cut FY13 car sales growth forecast. SIAM expected car sales to grow by 9-11% in FY13 as against the earlier target of 11-13% while commercial vehicle sales were expected to grow by 6-8% as against the earlier growth of 9-11%. 3: From the earnings front, IT giant Infosys' results gained the limelight this week pushing the stock down by as much as 10% as the company announced its results. Infosys slashed its dollar revenue guidance for FY13 to 5% against its earlier estimate of 8-10%, which dampened the mood of investors. On the other hand, TCS came out of with better than expected numbers for the quarter ended June 2012. Net profit of the company grew by nearly 12% quarter-on-quarter to Rs3280.5 crore, which was quite better as compared to software bellwether Infosys. From the banking sector, HDFC Bank reported a rise of 30.64% in its net profit for Q1. Sectoral and stock screening: All the 13 sectoral indices closed the week on a negative note. Top loser - BSE IT which was fell by 5.20%, BSE Teck fell by 4.70%, BSE CD declined by 3.38%. The remaining ten sectors slipped in the range of 0.01% to 3.28%. Looking at the 'A' group stocks, the top three gainers of the week were Jaypee Infratech which was up by 7.66%, Manappuram Finance up by 6.63% and Castrol India up by 4.71%. The top three losers of the week were Infosys down by 8.84%, Wipro down by 8.8.39% and National Aluminium Company down by 7.11%. FII/MF activity: The foreign institutional investors (FIIs) continued their buying activity and bought Indian stocks worth a net of Rs1540.90 crore, while the domestic investors were net seller of Indian stocks to the tune of Rs89.40 crore during the week till July 12, 2012. Global indices All the global markets closed on a negative note baring Dax100 which gained by 0.14%. Top losers: Hang Seng dropped by 3.58%, Nikkei fell by 3.29% and Nasdaq declined by 2.42%, Shanghai Comp slipped by 1.69%, Dow Jones down by 1.56%, CAC40 decreased by 1.06% and FTSE100 dropped by 1.06%. Market Outlook: The next batch of Q1 June 2012 corporate earnings, monthly inflation data and progress of the monsoon rains will dictate near term trend on the bourses. Major 'A' group companies which are going to announce results next week are Reliance Industries, Asian Paints Axis Bank, Bajaj Auto, Kotak Mahindra Bank, Hero MotoCorp and Dr Reddy's Laboratories. Shares of automobile firms and PSU OMCs will be in focus next week on speculation that the government will raise fuel prices after presidential election on July 19 or after the appointment of new Vice President on August 7. Another key thing to watch next week is the monthly inflation for the month of June 2012, which will be announced on Monday (July 16, 2012). The Reserve Bank of India (RBI) will announce first quarter review of the Monetary Policy 2012-13 on 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns.