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The Sensex and the Nifty slumped on Friday, posting a fifth consecutive fall and their worst weekly performance in two months, as disappointing results from ITC and Larsen & Toubro raised concerns about the health of the corporate sector.
The falls on Friday marked the longest losing streak for indexes since early June, after the central bank had kept interest rates on hold.
Sentiment this week has taken a hit due to caution about earnings and the US Federal Reserve's statement putting into play a rate hike this year.
Both indexes reversed two straight months of losses to record gains in October, with the NSE rising 1.47 per cent for the month and BSE gaining 1.92 percent.
For the week, the NSE lost 2.77 per cent, while the BSE lost 2.96 per cent, their worst performance since the week ended September 4.
"Quarterly earnings have not been up to street's expectations, that has been discounted but minor impacts will be felt," Alex Mathews, head of research at Geojit BNP Paribas, said.
The 30-share BSE index Sensex ended lower by 181.31 points or 0.68 per cent to 26,656.83 and the 50-share NSE index Nifty ended down by 45.95 points or 0.57 per cent to 8,065.80.
Among BSE sectoral indices, capital goods index fell the most by 2.65 per cent, followed by FMCG 2.34 per cent, realty 1.39 per cent and auto 1.2 per cent. On the other hand, banking index was up 0.92 per cent, followed by power 0.45 per cent, consumer durables 0.42 per cent and healthcare 0.37 per cent.
Shares of ITC fell 4.3 per cent after the company's September quarter earnings missed analysts' estimates. The stock was the biggest drag on the NSE index
Shares in industrial heavyweight Larsen & Toubro fell 4.11 per cent after its second-quarter net profit missed street estimates.
But not all companies fell after earnings. ICICI Bank was up 2.04 per cent after it reported a 12 per cent increase in quarterly profit due to faster retail loans growth.
Kotak Mahindra Bank, India's fourth-biggest private sector lender by assets, reported a better-than-expected 28 per cent increase in quarterly profit and a stable bad loan ratio, sending its shares up 3.77 per cent.
Jet Airways surged 9.34 per cent, while SpiceJet was up 8.47 per cent after the civil aviation secretary announced a slew of proposed reforms that included raising foreign direct investments in airlines to 50 per cent.
Dr Reddy's Laboratories gained 1.32 per cent after the drugmaker posted record quarterly earnings on Thursday, outpacing analysts expectations as sales across North America, Europe and India rose.
Meanwhile, rating agency India Ratings in a report said that the US Federal reserve's intention to hike rates in December was positive for markets and would remove uncertainty.
The agency said: "A rate hike by the US Fed is imminent, but it is unlikely to be disruptive for global financial markets. The Fed’s calibration of language will give global investors enough lead time to align their portfolios for fully internalising the possibility of a rate hike in December 2015. Over the last couple of months, policy makers across the world have expressly supported growth; and economic activity appears to be stabilising though at lower levels. Against this backdrop, the Fed's intent to hike rates in the near term inspires more confidence in US recovery prospects."
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