how Sensex shed 840 points from all-time highs

BSE Sensex was off 266 points or 1.3% while Nifty scrapped 84.60 points or 1.38% at 6,056.15, this week.

After seven straight sessions of losses partially recovered on hopes that scaling back of US bond 85-billion-a-month bond buying program has gone on the backfoot for now. Also, Reserve Bank of India (RBI) governor Raghuram Rajan’s attempt to talk up the rupee and calm equity and bond markets, on Wednesday, helped adding to the positive sentiment

The relief came amid heavy profit-taking in frontline strocks at higher levels after benchmark stock indices scaled record high levels. After which market sentiment went for a toss on weak October inflation data, industrial production data and better than expected US jobs numbers.

The sentiment on Thursday was largely boosted by US Federal Reserve’s incoming boss Janet Yellen, who said the US economy and labour markets were functioning “far short of their potential and had to improve before the stimulus programme could be rolled back”.

Thursday’s recovery in key stocks benchmarked in Sensex and Nifty indices helped limit losses after Nifty closed at a 1-month low level of 6079 on weak sentiment.

Earlier, strong US jobs data re-ignited fears that Federal Reserve could soon start scaling back its 85-billion-a-month bond buying program also know as QE-3 (Quantitative easing-3) as early as December, which resulted in lower FII net buying of Indian shares for past some sessions.

Yellen’s comments late Wednesday suggested that the tapering of the US Federal Reserve’s 85-billion-a-month bond buying program may not kick off earlier than expected. This gave a fresh boost to hopes of easy liquidity to continue its eastwards flow towards emerging markets such as India, facilitated by FIIs.

Market participants dubbed Yellen’s comments of an indication that QE 3, would stay for a while which spurred a rally in global shares.

Also, central banker Raghuram Rajan’s attempt to talk up the rupee and calm equity and bond markets, a day earlier, helped adding to the positive sentiment, following which rupee recoverd from its two month low levels of 63.71-a-dollar. Reserve Bank of India (RBI) governor, Raghuram Rajan, expressed comfort on Wednesday about core inflation and highlighted the narrowing current account deficit.

The 30-share BSE Sensex index closed 205 points or over 1% higher at 20,399 levels and the broader 50-share Nifty surged almost 67 points higher to close at 6,056 levels on Thurday marking an end to a 7-day losing streak of frontline stocks on both the indices. The Sensex scrapped over 1045 points in the last seven trading sessions before Thursday, after touching its life-time closing high of 21,239 on mahurat session of Diwali.

Higher-than-expected October inflation data,  unveiled by the government during the holiday truncated week however ensured that the upside in key indices was capped. With both the consumer price index (up 10.09 per cent year-on-year) and wholesale price index (up seven per cent y-o-y) for October climbing higher, market has factored in the possibility of a rate action by RBI in December, feel experts.

Experts feel such a move would help anchor inflationary expectations and nudge the government to address supply-side issues affecting prices. Any action taken by either the government or the Reserve Bank of India (RBI) to counter runaway prices will be a welcome step to counter run-away prices.

Industrial production (IIP) data for September revealed post market hours on Tuesday, rose a mere 2% from an year ago and more than 0.4% a month earlier (in August). The lackluster show was mainly due to a continuous slump in output of capital goods.

India’s trade deficit jumped in October, rebounding from a 2-1/2 year low the previous month, as purchases of gold picked up ahead of the festival season, provisional government data showed on Monday. Last month’s deficit stood at $10.56 billion, compared with $6.7 billion in September. Gold and silver imports rose to $1.37 billion in October compared with $800 million in the previous month, imports in total fell 14.5 percent year-on-year to $37.83 billion while merchandise exports rose 13.47 percent year-on-year.

Key benchmark indices were off 1% as compared to last week, in the holiday shortened week ended November 15, led primarily by profit booking at higher levels followed by consolidation on key domestic and global cues.

The 30-share BSE Sensex was off 266 points or 1.3% while the broader 50-share Nifty index of NSE was down 84.60 points or 1.38% to 6,056.15. Nifty ended the week above the key psycological figure of 6000 after slipping below it in the volatile week.

Broader markets however fared better than benchmark indices; BSE Mid-cap and small-cap indices were down between 0.9 – 1.1%, for the week.

Among sectors, realty was worst hit and ended the week almost 3% lower on the BSE sectoral indices followed by capital goods, oil & gas and PSUs which were down between 2.4-2.6%. Barring auto index nearly all indices ended in red.          

Among the 30-share Sensex pack, 21 stocks declined and 8 rose in the week ended Thursday, 14 November 2013. Shares of ICICI Bank remained unchanged for the week to settle at Rs 1,049.75.

Frontline stock buzzers:

Mahindra & Mahindra surged 5.27% in the week. Mahindra & Mahindra (M&M) and Mahindra Vehicle Manufacturers (MVML) (entity) reported gross revenue and other income dropping 8.34% to Rs 9887.6 crore in Q2 September 2013 over Q2 September 2012. PAT was down 1.78% to Rs 1303.6 crore in Q2 September 2013 over Q2 September 2012. After providing for tax, the profit rose 5.06% to Rs 1027.6 crore Q2 September 2013 over Q2 September 2012. The operating margin of the entity rose to 14.5% in Q2 September 2013 from 13.8% in Q2 September 2012. The company announced Q2 September 2013 results during trading hours on Wednesday, 13 November 2013.

Tata Motors added 0.25% during the week. Also, Tata Motors’ global October wholesales (including Jaguar Land Rover) stood at 88,881 units. Global wholesales of all commercial vehicles – Tata and Tata Daewoo range -were 38,067 units.

ONGC fell 2.56%, dragging BSE oil & gas index down with it, in the week after posting its September quarter results. The company’s net profit rose 2.83% to Rs 6063.86 crore on 9.69% growth in total income to Rs 23897.64 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Wednesday, 13 November 2013.

Coal India, which posted its Q2 results also on Wednesday lost 5.89% durins the week. The company’s consolidated net profit declined 0.83% to Rs 3052.36 crore on 5.57% growth in total income to Rs 17594.28 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Wednesday, 13 November 2013

Sun Pharmaceutical scrapped 0.41% after the company posted consolidated net profit growth of 325.63% to Rs 1362 crore. Net sales increased 58% increase to Rs 4192 crore as compared to same period an year ago. The drug major revised its revenue growth guidance to 25% compared to previous guidance of 18-20% for FY14.

Cipla was down 4.47% for the week gone by. It’s consolidated PAT declined 26.6% to Rs 358 crore on 14% growth in revenue to Rs 2463 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Wednesday, 13 November 2013.

Dr Reddy’s Laboratories up 2.06%, Maruti Suzuki India was up 1.94% and Wipro added 0.76% from the Sensex pack and were the top gainers while GAIL (down 5.82%), Sesa Sterlite (down 4.33%) and L&T (down 3.5%) were the top laggards.

 

Source: business-standard 

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