The Hindu Business Line : Markets this week

After the dust has settled over the political turmoil, it's now serial blasts. It seems there is no dearth of negatives for Indian markets these days. And yet, the indices showed its resilience ahead of RBI's first quarter credit policy. The Sensex opened flat on Monday and moved in a narrow range to finish at 14350 with a slender gain of 75 points.

SBI reported a 15-per cent increase in net profit at Rs 1,641 cr in the first quarter, despite hefty provisioning of Rs. 1,656 cr for marked-to-market losses. A substantial increase in fee income, robust NPA recovery and write-back of loan outstandings seem to have helped SBI to report a higher net profit.

Treasury income losses dragged down ICICI Bank's net profit by six per cent for the first quarter. The bank suffered a Rs 594-crore loss on its trading portfolio, owing to increase in rates and bond yields. Net profit dropped to Rs 728 crore in the June-ended quarter from Rs 775 crore a year-ago.

Despite a large subsidy burden of Rs. 9,800 crore , ONGC managed to register a 44 per cent increase in net profit at Rs 6,636 crore during the first quarter. Turnover rose 47 per cent to Rs 20,123 crore (Rs 13,728 crore). This was mainly due to high price realisation on crude oil and efficient cost management, Mr R.S. Sharma, CMD, said.

L&T posted a 33 per cent rise in net profit with a sales growth of 53 per cent for the first quarter of the fiscal as revenues and margins rose. Its key engineering and construction (E&C) business looked up.

While several public sector banks reported a flat growth in profit and some even losses, Bank of India's net profit surged by 78 per cent to Rs 562 crore in the quarter ended June 30, 2008, against Rs 315 crore in the corresponding period of last year. The bank achieved this by focusing on core banking operations, prudent NPA management and keeping the investment portfolio to minimum.

As an anti-inflationary measure, RBI sharply raised its key interest rates on Tuesday, which is expected to trigger an across-the-board hike in bank lending rates. The central bank marked up the Repo by 50 basis points to 9 per cent, the highest in seven years, and CRR by 25 basis points to 9 per cent.

RBI's hawkish stance caught investors by surprise, triggering a 500-plus point fall in the Sensex. The Sensex and Nifty fell sharply after the RBI measures were announced. The Sensex settled 557 points lower at 13,791, while the Nifty closed 142 points lower at 4,189.85.

In a falling market, Hindustan Unilever moved up around 3 per cent on decent buying. According to market analysts, investors bought the shares as a defensive bet.

Reliance Power shares gained on Wednesday, partly owing to the NSE announcement that the scrip is to be included in the Nifty index. The scrip will replace Dr Reddy's Laboratories from September 10, a NSE circular said.

Reliance Capital reported an 8 per cent increase in its standalone net, at Rs 326.8 crore against 302.4 crore posted during the corresponding year-ago quarter. The share price closed at Rs 1,285 on BSE, rising 5.4 per cent.

Tata Steel posted a 21.78 per cent rise in its standalone net profit at Rs 1,488.40 crore for the quarter-ended June 30, against Rs 1,222.11 crore in the same period of last year. The stock appreciated Rs 25 to finish at Rs 655.

On Thursday, the annual Wholesale Price Index-based inflation rose to 11.98 per cent for the week ended July 19, higher than the previous week's rise of 11.89 per cent. The year-on-year inflation rate surge is mainly on account of Manufactured Product prices.

RCom plunged on Friday by as much as 22 per cent in early morning trade on concerns of wireless biz. The stock opened at Rs 500.05, and dropped to touch an intra-day low of Rs 410.05, down by Rs 90 or 21.95 per cent over Thursday's close of Rs 500. Value-buying was seen at lower levels as the stock climbed to finish the day at Rs. 440.

Investors now seem to be a confused lot, witnessing the market strength in the face of serial blasts, tough measures from RBI, below normal rains, mixed numbers from corporate earnings and heavy losses from forex hedging. There is however an undercurrent of optimism, as a section of market players is expecting the reforms process to be speeded-up, and possible clinching of the civil nuclear deal too. Ignoring inflation blues on Friday, the Sensex gained a handsome 320 points to finish the week at 14,670.

Compiled by B L Sudarsan

Podcast by R Venkatesan

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