The Hindu Business Line : Market ends negative

The stock market once again ended the week on a negative note, losing five per cent and closed at 8915 points. Following the record slump in US consumer prices, the Sensex plummeted to November 2005 levels during the week, on cues of deepening recession in the US. A fall in global bourses amid apprehensions that slowing economic growth worldwide could hurt corporate margins resulted in a decline in the Sensex.

However, improved sentiment in the Asian bourses, short covering and value buying resulted in both the Sensex and the S&P CNX Nifty gaining 5.5 per cent on Friday. There are expectations that the RBI may ease interest rates in the coming weeks after the inflation numbers came in marginally lower at 8.9 per cent for the week-ended November 8.

Among the Sensex stocks, Ranbaxy and SBI were the top gainers of the week, though the gains were marginal at 2.6 per cent and 1.1 per cent respectively. Jaiprakash Associates (20.7 per cent) and DLF (17.7 per cent) were the top losers of the week.

Sectoral Performance

Most of the sectoral indices ended in the red with the FMCG pack ending flat.

The BSE Realty index was the top loser (18.2 per cent). Unitech, the real estate developer, lost 30.4 per cent in trade during the week. This followed a forecast of 30 per cent fall in property prices by Goldman Sachs.

The BSE Bankex fell by 10.8 per cent. Many private sector banks led the fall earlier during the week, amid concerns that their net interest margins could get hurt on account of slowdown in growth and high borrowing costs that could increase their non-performing assets. ICICI Bank lost 15.3 per cent as Fitch stated that it may downgrade the rating if the bank’s asset quality deteriorates more significantly than expected.

Kotak Mahindra Bank and Infrastructure Development Finance Company had their stock ratings cut from ‘neutral’ to ‘sell’ by Goldman Sachs and lost 18.3 per cent and 17.2 per cent respectively. Reports of a production cut in Gurgaon plant resulted in Maruti Suzuki losing 4.7 per cent. The BSE Metal index shed 10.2 per cent. The steel stocks were not buoyed by the Government’s measure to impose a duty of 5 per cent on imports of pig iron, semi-finished, long and flat steel products. SAIL fell by 8.5 per cent and JSW Steel lost 25.6 per cent.

Tata Steel fell by 7.6 per cent after Corus Group announced that its production cut would extend beyond December. Hindustan Copper lost 8 per cent on the back of its outlook being one of lower profit margin. Hindalco lost 8.3 per cent on account of falling aluminium prices and Novelis’ poor performance in the September quarter.

The fourth largest US bank by market value, Citigroup announced plans to cut more than 50,000 jobs. The companies which had Citigroup holdings registered a fall in their share prices. For instance, Educomp Solutions, in which Citigroup has a stake of 5.48 per cent, fell by 26.5 per cent during the week.

On Thursday, the rupee opened at a record low of 50.49 and closed at an all-time low of 50.20. Crude oil futures fell below the crucial mark of $50 a barrel.

More Stories on : Stock Markets | Commentary

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page