The Hindu Business Line : Weak global cues subdue market sentiments

Last week was that of mixed feelings for stock market investors. Even as the ‘heads began rolling’ in the South Block, the reason much-touted for the brief surge in the market earlier last week, the euphoria soon fizzled out as bellwether indices gave up gains following their global peers and other domestic concerns. But expectations of further cut in interest rates and Government’s monetary support to infrastructure and export companies did provide interim relief, as markets breached the 9000-mark mid-week. This ‘dead cat bounce’ breathed life into even the cement and capital goods companies that had got badly mauled in recent times. The key indices- Sensex and Nifty closed the week losing 1.4 per cent and 1.47 per cent respectively.

Gloomy numbers

The week that saw the US officially enter into a recession, a slump in China’s manufacturing industry on tumbling number of new orders and global recession worries kept equity markets and its participants the world over on their toes.

FTSE 100 closed the week losing 1.5 per cent and CAC 40 lost 3.7 per cent. Reports on a slowest pace of growth in the last seven-eight years in Australia in the September quarter added to the already present pessimism in the air.

Back home, for the first time in three years, the export numbers (for October) were down by 12 per cent year-on-year. Further, the ABN Amro Bank Purchasing Managers’ Index (PMI), based on a survey of 500 companies, fell sharply to 45.8 (52.2 in October) in November, signalling yet again at the turn-down of events in the economy.

Realty stocks outperform

Last week saw SEBI extend the cross margining facility, which was earlier available for institutional trades only, across investor categories. Besides this, news of the central government’s proposed stimulus package for infrastructure companies and anticipation of interest rate cuts pepped up optimism, especially in realty and banking stocks. The BSE Realty index rose 8.4 per cent in the week. Unitech and Indiabulls Real Estate climbed up by 33 per cent and 10 per cent while DLF gained 2.5 per cent over the week. The BSE Bank soared 1.3 per cent, with State Bank of India gaining 4 per cent and ICICI Bank by 2 per cent.

Stocks in the IT basket were among the worst performers, with the BSE IT index losing over 7 per cent in the week. Auto makers Maruti Suzuki and M&M were also down over 8 per cent on falling sales numbers.

Tata Steel topped the returns chart in the BSE-30 basket, gaining over 21 per cent during the week. The company announced its consolidated numbers last week; net profit registered a growth of over 215 per cent. Pharma major, Dr. Reddy’s surged 11.3 per cent on launching Imitrex tablets in US.

Commodities

From a closing of $53.49 last week, oil sank to below $43 on Friday on reports of declining fuel demand in US. Stocks of oil marketing companies such as BPCL, HPCL and IOC saw some positive led by hopes of reducing under-recoveries. Gold prices too dropped by 5 per cent during the week.

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