Market slides on weak global cues

Key benchmark indices dropped in choppy trade on growing fears about the spreading of the euro-zone debt crisis to large European economies such as Italy and Spain. Impasse over debt ceiling in the US and back-to-back warnings by Moody's and S&P on US debt also weighed on the sentiment. US is the world's biggest economy. Indian stocks, nevertheless, shrugged off three serial bomb blasts in Mumbai on Wednesday (13 July 2011) evening as the blasts were of relatively lower intensity compared to some in the past.



The Sensex fell 296.12 points or 1.57% to 18,561.92 in the week ended Friday, 15 July 2011. The 50-unit S&P CNX Nifty fell 79.55 points or 1.41% to 5581.10. The BSE Mid-Cap index rose 10.44 points or 0.15% to 7,006.75. The BSE Small-Cap index fell 11.92 points or 0.14% to 8,363.22. Both the BSE Small-Cap, Mid-Cap indices outperformed the Sensex.

Industrial output in May 2011 rose a slower-than-expected 5.6% from a year earlier, government data showed on Tuesday. April's industrial output growth was revised downwards to 5.8% from 6.3%. Manufacturing output, which constitutes about 80% of the industrial production, rose an annual 5.6% in May 2011, compared with a revised 6.3% growth a month earlier.

Chief Economic Adviser Kaushik Basu said wholesale price index-based inflation rate may ease to a little above 6% by March 2012. The latest data showed that the wholesale price index (WPI) rose an annual 9.44% in June 2011, driven by higher manufactured goods and fuel prices. The rate of rise in inflation was lower than market expectation of a 9.7% rise. The inflation figure for April 2011 was revised upwards to 9.74% compared to 8.66% reported earlier.

The government is working with the Reserve Bank of India (RBI) to bring down inflation, finance minister Pranab Mukherjee said in a statement on Thursday. Mukherjee also said that June inflation data was a matter of concern and he was monitoring the price situation closely. Mukherjee said an increase in fuel prices, seasonal effects and an upward movement in prices of minerals as well as manufactured products were driving inflation.

Inflow from foreign institutional investors (FIIs) in July 2011 totaled Rs 6137.50 crore (till 13 July 2011). FIIs had bought shares worth a net Rs 4572.20 crore in June 2011. FII inflow in calendar 2011 totaled Rs 8807.90 crore (till 13 July 2011).

Trading for the week began on a weak note. Weakness persisted on the domestic bourses for the second day in a row on Monday, 11 July 2011, as world stocks fell on weak US job data and as euro-zone debt worries resurfaced. The BSE Sensex shed 136.65 points or 0.72% to settle at 18,721.39. The S&P CNX Nifty was down 44.55 points or 0.79% to 5,616.10.

Key benchmark indices extended losses for the third straight day on Tuesday, 12 July 2011, as world stocks fell on growing fears about the spreading of the euro-zone debt crisis to large European economies such as Italy and Spain. Data showing slower-than-expected growth in industrial production in May 2011 and a downward revision in industrial production growth for April 2011 also hit sentiment. The BSE Sensex lost 309.77 points or 1.65% to settle at 18,411.62. The S&P CNX Nifty was down 89.95 points or 1.6% to settle at 5,526.15.

Key benchmark indices snapped three-day losing streak on Wednesday, 13 July 2011, as world stocks rose on stronger-than-expected Chinese Q2 June 2011 GDP data. Data showing a strong 9.5% expansion of the Chinese economy in Q2 June 2011 helped offset euro-zone debt worries triggered by Moody's Investors Service downgrading Ireland to junk status on Tuesday, 12 July 2011. The BSE Sensex jumped 184.40 points or 1% to 18,596.02. The S&P CNX Nifty was up 59.30 points or 1.07% to 5,585.45.

Key benchmark indices closed marginally higher on Thursday, 14 July 2011, giving up strong intraday gains as euro-zone debt worries resurfaced and after Moody's warned on Wednesday, 13 July 2011, that the United States may lose its top credit rating. US is the world's biggest economy. The BSE Sensex was up 22.18 points or 0.12% to 18,618.20. The S&P CNX Nifty was up 14.35 points or 0.26% to 5599.80.

Key benchmark indices edged lower on Friday, 15 July 2011, snapping gains in the preceding two trading sessions, on caution ahead of the weekend. The BSE Sensex fell 56.28 points or 0.3% to 18,561.92. The S&P CNX Nifty fell 18.70 points or 0.33% to 5,581.10.

Among the 30-Sensex shares, 25 shares declined and 4 shares rose. One stock was unchanged.

IT bellwether Infosys was the top Sensex loser last week. The stock fell 8.31% to Rs 2730.55 on disappointing Q1 June 2011 results. Consolidated net profit as per International Financial Reporting Standards fell 5.3% to Rs 1722 crore on 3.2% growth in revenue to Rs 7485 crore in Q1 June 2011 over Q4 March 2011. The result was announced before trading hours on Tuesday, 12 July 2011.

India's largest aluminium maker by sales Hindalco Industries fell 6.26% to Rs 176.60. It was the second biggest Sensex loser.

Infrastructure company Jaiprakash Associates tumbled 3.95% to Rs 76.50. It was the third biggest Sensex loser.

India's second largest two-wheeler maker Bajaj Auto fell 2.62% to Rs 1418.80 on disappointing Q1 June 2011 results. The company announced during market hours on Thursday that net profit rose 20.48% to Rs 711.06 crore on 22.8% increase total operating income to Rs 4777 crore in Q1 June 2011 over Q1 June 2010. Both revenue growth and net profit growth lagged market expectations.

Bajaj Auto on Thursday said it has shelved a project to develop a low-cost minicar in India for Renault S.A. and Nissan Motor Co. as the company found the project commercially unviable. Bajaj Auto Managing Director Rajiv Bajaj said the company will instead unveil a low-cost commercial vehicle at the auto show at New Delhi in January 2012. "We will stay in the commercial space...it could be a passenger or a goods carrier," Bajaj said at the time of announcing the company's Q1 June 2011 results. "It will be a low-capex, high-EBITDA [earnings before interest, taxes, depreciation and amortization] project," he added.

Kevin D'sa Bajaj Auto's president in charge of finance said Bajaj Auto may raise vehicle prices during July 2011 to March 2012 if raw material costs don't stabilize.

Hero Honda Motors (down 3.76%), Wipro (down 3.63%), Tata Steel (down 3.56%), Bharat Heavy Electricals (down 3.02%) and HDFC (down 2.60%), edged lower from the Sensex pack.

India's largest IT company by sales TCS fell 2% to Rs 1148.05. TCS' consolidated net profit fell 7.9% to Rs 2415 crore on 6.3% growth in revenue at Rs 10797 crore in Q1 June 2011 over Q4 March 2011. Operating profit declined 2% to Rs 2820 crore in Q1 June 2011 over Q4 March 2011. The result was announced after trading hours on Thursday, 14 July 2011.

TCS added 24 new clients in Q1 June 2011. TCS said the number of clients in the category of $50 million has risen to 33 from 27. There was a gross addition of 11,988 employees and net addition of 3,576 employees in Q1 June 2011. The company said employee utilization rate remained high at 83.2% (excluding trainees) in Q1 June 2011.

TCS said growth in Q1 June 2011 was balanced and broad-based. Growth across industries was led by hi-tech, retail and BFSI. There was balanced growth across IT and other service lines led by infrastructure, assurance and global consulting services. All markets including the US, Europe grew alongside growth markets like India and Asia Pacific, TCS said.

Index heavyweight Reliance Industries (RIL) rose 2.21% to Rs 873.30. The stock topped the Sensex gainers. ONGC (up 0.71%), ITC (up 0.52%), Mahindra & Mahindra (up 0.28%), also edged higher from the Sensex pack.

India's largest private sector bank by market capitalisation ICICI Bank was flat at Rs 1060.05.