Markets close week with 1% loss

Weakness in the banking stocks alongwith global worries weighed on the sentiments, with the Sensex closing the week down by 1.34% and the Nifty down by 1.12%

Major news for the week

September Services PMI shrinks, signals broader economic slowdown

Moody's cuts Italy credit rating

Exports surge 44% in August

SBI hits 52-week low after Moody’s downgrade

Food inflation at 9.41% versus 9.13%

ICICI Bank spurts on Moody's reaffirm rating

Moody's cuts ratings of 12 UK banks

India's factory PMI growth falls to 30-month low



Indian indices

The Indian markets closed a holiday-shortened week on a negative note. Growing concerns over the euro zone debt crisis triggered selling across the globe on the back of renewed fears of Greece default as its government stated it would miss deficit targets for 2011 and 2012. Shocking ratings downgrade from Moody's, first on SBI, and then, 21 European banks spooked the financial sector across the globe. The banking space took the major hammering this week, which punctured markets. Also, brisk selling by foreign funds triggered by weak global trend amid fears of worsening euro-zone debt crisis too kept the markets weak. Data showing a decline in service sector activity in September 2011 also added to the worry.

However there was a strong pullback on the last day of the week, as investor sentiment got boosted after European Central Bank (ECB) decided to offer its banks additional longer-term liquidity and also restart its covered bond purchases.

The Sensex swung 602 points between a weekly high of 16347 and a weekly low of 15745 and closed the week lower by 221 points or 1.34% at 16233. The Nifty swung 194 points between a weekly high of 4923 and a weekly low of 4728 and closed the week 55 points lower or 1.12% at 4888. The key benchmark indices fell in three out of four sessions of the week.

Global signals

Majority of the global indices rose in this week. The only two losers — Nikkei dropped by 1.09% and the Sensex lost by 1.34%. Top performers — Nasdaq rose by 3.78%, FTSE 100 gained by 3.17% and CAC 40 advanced by 3.13%. Shanghai Composite remained closed throughout the week.

Sectoral and stock screening

All the sectors closed the week in the red zone barring BSE CG up by 0.74%. The major losers — BSE Bankex was the worst performer of the week falling by 4.63%, BSE TECk slipped by 1.74% and BSE Realty fell by 1.53%.

Coming to 'A' group stocks, top three gainers of the week – Sun TV Network jumped by 12.60%, Educomp Solutions surged by 6.88% and Reliance Power rose by 5.53%. Top three losers of the week – Shipping Corporation of India tumbled by 16.93%, SKS Microfinance declined by 13.72% and Adani Enterprises fell by 12.14%.

FII/MF activity

The foreign institutional investors (FIIs) sold Indian shares to the tune of Rs3,028.10 crore in this week. The domestic investors sold Indian shares worth a net of Rs224.50 crore this week.

Outlook

The earning season is set to begin next week, with IT major Infosys declaring its results on Wednesday (October 12, 2011). Telecom stocks will be in focus next week as telecom minister Kapil Sibal will unveil a draft of the government's new national telecommunications policy on Monday (October 10, 2011). Data on industrial production for August 2011 due on Wednesday and inflation for September 2011 due on Friday (October 14, 2011), could provide cues on the Reserve Bank of India's likely monetary policy stance at the half-yearly review of the monetary policy on October 25, 2011. Developments across the globe, mainly in Europe will continue to impact markets.