The Hindu Business Line : Markets not enthused by positive news flows

The stock markets gave a thumbs-up last Monday after the country received a waiver from the Nuclear Suppliers Group for receiving nuclear fuel supply. The BSE Sensex opened with a huge gap and ended the day with a 461-point gain. The jubilation did not last long as markets for the week-ended September 12 declined by 3.4 per cent. Record losses reported by Lehman Brothers, consequent sell-off by its investors, and its anxious attempts to sell-off assets coupled with the depreciation of the rupee and a few other foreign currencies led to weak sentiments in the market.

The markets failed to take notice of a number of other positive events such as oil nearing the $100-mark, softening of India’s inflation numbers and improvement in the IIP growth.

Reliance Industries with a weight of 14.25 per cent in the bellwether index – Sensex, shed 7.1 per cent after markets feared a margin pressure for the company on the back of declining crude prices.

On Monday, capital goods and power stocks reacted positively on expectation that the NSG waiver might open a window of opportunities, but shed all the gains by the end of the week. The BSE Bankex also witnessed profit-booking over the last two days of the week. IT stocks were beaten down despite the rupee depreciation as most companies may not gain from the currency movement as a result of hedging done at Rs 42-43 levels against the dollar. Depreciation of other currencies such as the euro and pound against the dollar was also viewed negatively.

Metals hit

The BSE Metal index, with a decline of 7.7 per cent was the worst hit among sector indices. Apart from weakening commodity prices, the domestic cut in the price of steel led to the fall. Jindal Steel lost as much as 11 per cent over the week followed by JSW Steel (7.3 per cent) and Tata Steel (6.5 per cent). Sesa Goa, NMDC and Hindustan Zinc were the other losers in the metal index. Nalco however posted a gain of 8.6 per cent. Sterlite Industries’ corporate restructuring programme was not viewed favourably as the market beat the stock down by 17 per cent. Instead, MALCO, the group company which will merge Sterlite’s aluminium business with itself, gained 7.5 per cent to Rs 164. Infrastructure, infrastructure financing companies and realty stocks were hit on the back of concerns over a slowdown in infrastructure projects as well realty offtake. Indiabulls Real Estate, IVRCL Infrastructures, GMR Infrastructure, DLF, and Ansal properties were among stocks that declined by over 5 per cent over the week.

Other gainers

Raj TV was among the notable list of gainers. The stock rose 14.1 per cent after the company announced its foray into print business. Adani Enterprises gained 8.6 per cent over the week to Rs 618. Adani Enterprises would sell a part of its stake in its subsidiary power company, which received the go-ahead for an IPO. Ramco Systems gained 13 per cent after an announcement to come up with a rights offer.

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