Weekly Market: Sensex sheds 263 points

The news came after International Monetary Fund (IMF) slashed the third-largest Asian economy’s growth forecast for 2012 to 4.9 per cent from 6.1 per cent projected earlier,due to low business confidence and “sluggish structural reforms”.

The market got a further jolt due to disheartening revenue and earnings guidance in rupee terms for the current fiscal given by IT bellwether Infosys in its quarterly results announced on Friday.

Infosys posted 24.3 per cent jump in consolidated net profit at Rs 2,369 crore for Q2. The Bangalore-based software exporter lowered its revenue growth guidance for the current fiscal to 17.3 per cent from earlier target of 19.7 per cent.

The Sensex resumed higher at 18,969.19,but declined afterwards to 18,581.49 before settling the week at 18,675.18,showing a loss of 263.28 points,or 1.39 per cent,from its last weekend’s level. The 30-share index had gained 1,508.90 points,or 8.65 per cent,in the last five weeks.

The NSE 50-share Nifty dropped by 70.90 points,or 1.23 per cent,to finish at 5,676.05. It had gained 488.45 points,or 9.28 per cent,in the last five weeks.

The World Bank lowered its fiscal year economic growth forecast for India to 6 per cent due to infrastructure problems and slow policy reform,and warned there is a high risk that growth could slow further if economic conditions in Europe deteriorate. The rise in Index of Industrial Production (IIP) by 2.7 per cent in August,reversing the contraction trend witnessed during the previous two months,and slight fall in retail inflation to 9.73 per cent from 10.03 per cent in the previous month failed to provide support to the market.

Market participants were not impressed with Finance Minister P Chidambaram’s promise to take steps to deal with inflation,fast-track disinvestment and announce a roadmap for fiscal consolidation.

Meanwhile,Foreign Institutional Investors (FIIs) continued their buying spree,investing Rs 3,194.86 crore during the week,including the provisional figure of October 12.

“Infosys disappointed the Street which tanked despite good IIP number. This was inevitable as many FIIs were pre- determined to exit IT sector due to below expectation growth.

“Not only the IT sector,wherever the stock will not meet analyst expectations,they will receive the same hammering as valuations have reached the upper end for FY12- 13. The reforms will not yield any results in the short-term,” said Kishor Ostwal,CMD,CNI Research Ltd.

“Anyways,we had given a sell call at 5820 in Nifty and asked to cut short and go long at 5650. This range is very important as either side these have become support and resistance.

“Ever since the FM took charge sentiments have changed for better though nothing constructive has come to really address the fiscal deficit. We expect RATE CUT on 30th October which will take us past 6,000 in November as 30th October falls in next settlement. Monday RIL is set to announce their results post market,which will set the further tone of the market,” he added.

Out of the 30-share Sensex pack,22 stocks ended with losses while eight others finished with gains.

Major loser were BHEL (6.76 pct),Wipro (5.92 pct),Hindalco (5.76 pct),Infosys (5.23 pct),Reliance Ind (4.49 pct),SBI (3.79 pct),Tata Motors (3.49 pct),ONGC (3.44 pct),Gail India (3.31 pct) and Bharti Airel (2.08 pct).

However,Sun Pharma shot up by 4.53 pct followed by ITC 2.64 pct,Tata Steel 2.48 pct and HDFC Bank 1.35 pct.

Among the major indices the BSE-Realty dropped by 4.10 pct followed by the BSE- Oil&Gas 3.49 pct,the BSE-IT 3.08 pct,the BSE-Teck 2.92 pct,the BSE-Power 2.47 pct,the BSE-Auto 2.08 pct,the BSE-PSU 1.44 pct and the BSE-CG 1.44 pct.

The total market turnover at BSE and NSE moved down to Rs 12,086.76 crs and Rs 58,472.73 crs from the last weekend’s level of Rs 13,145.51 crs and Rs 58,988.59 crs. Oil and oilseeds: Excluding linseedoil,which traded steady,both edible and non- edible recovered at the oils and oilseeds market during the week under review.

Groundnut oil prices strengthened on sustained stockist and retail demand on the back of approaching festival season.

Refined palmolein also rose on good buying support from retailers amid bullish Malaysian cues.

Castorseeds bold and castoroil commercial gained moderately on renewed demand from shippers and soap industries.

Castorseeds futures climbed on heavy speculative offtake amid rising spot market as well as higher export enquiries.

Linseedoil prices remained steady in the absence of any major buying activity from paint industries.

In the edible oils segment,groundnut oil resumed sharply higher at Rs 1,100 and advanced to Rs 1,150 before ending at Rs 1,040 from preceding weekend’s level of Rs 1,050. Showing a net gain of Rs 90 per 10 kg.

Refined palmolein resumed slightly higher at Rs 513 and rose further at Rs 521 before settling at Rs 520 from last weekend’s level of Rs 510,registering a moderate gain of Rs 10 per 10 kg.

In the non-edible section,castorseeds bold resumed steady at Rs 3,400 and surged to Rs 3,475 before concluding at Rs 3,450 from last weekend’s level of Rs 3,400,a gain of Rs 50 per 100 kg.

Castoroil commercial also opened stable at Rs 710 and moved up to Rs 725 before ending at Rs 720 from its previous weekend’s level of Rs 710,a modest gain of Rs 10 per 10 kg.

Linseed oil maintained the level of preceding weekend’s Rs 775 per 10 kg throughout the week.

Moving to the futures section,castorseeds for December delivery resumed slightly lower at Rs 3,710 and traded between Rs 3,895 and Rs 3,703 before finishing at Rs 3,891 from last Saturday’s closing level of Rs 3,715 showing a net gain of Rs 176 per tonne.

Forex: In tandem with fall in local equities amid likely downgradation of India’s sovereign credit rating by global rating agency Standard and Poor’s (S&P),the rupee snapped its five week of gaining string,dipping by 96 paise to close at 52.81 against the Greenback during the week under review.

Fresh dollar demand from importers amid late weakness in dollar overseas also put pressure on the rupee while sustained capital inflows restricted the fall to some extent.

The rupee depreciated four out of five trading days in the week.

At the Interbank Foreign Exchange (Forex) market,the domestic unit commenced the week lower at 52.12 a dollar as against last weekend’s level of 51.85 and dropped by 79 paise or 1.52 pct on Monday itself to log the second biggest fall in 2012. Previously,it had plunged by 85 paise or 1.51 pct on June 22 when it had settled at an all-time low of 57.15.

Later,it continued to moved down to a low of 53.18 before concluding the week at 52.81,showing a fall of 96 paise or 1.85 pct. In last five weeks of gaining streak,it had spurted by 367 paise or 6.61 pct. On Monday,it had touched a high of 51.97.

The Indian benchmark sensex also broke its 5-week of rally and ended lower by over 263 points or 1.39 pct.

Forex dealers said that the rupee saw some pressure after International Monetary Fund (IMF) slashed its growth forecast for India for 2012 to 4.9 pct from 6.2 pct earlier.

The sentiment worsen further after the S&P threatened to downgrade India’s sovereign credit rating to junk grade within two years.