The Indian economy bettered analysts’ growth estimates by a tad, posting a 5.5 growth for the June 2012 quarter. This compares to the market expectation of 5.3 per cent growth in GDP for the same period. While this provided some respite for the markets, the country’s inflation woes seems to remain unabated at least in the near term.

India’s wholesale-price index rose 6.87 per cent last month from a year earlier. In the light of the persistently high inflation and policy deadlock, BNP Paribas downgraded the Indian stock market from Overweight to Neutral.

BSE Sensex was down 2 per cent to 17,429. Nifty closed the week at 5,258, down 2.4 per cent.

Higher inflation came in as a dampener for the rate-sensitive sectors such as banking, auto and realty, as it subdued hopes of a near term rate cut. Bank Nifty was down 3.3 per cent, while BSE Auto lost 3.7 per cent during the week.

Among the financial institutions, Power Finance Corporation was the top loser, declining 7.5 per cent followed by South Indian Bank which lost 7.3 per cent for the week. Other major losers include Axis Bank (down 7.1 per cent), Vijaya Bank (down 6.7 per cent), Indian Bank (down 6.5 per cent), Bank of India (down 5.8 per cent), IDFC (down 5.6 per cent), Punjab National Bank (down 4.8 per cent) and ICICI Bank (down 4.8 per cent)

Within the auto space, two wheeler majors such as Hero Motorcorp (down 7.7 per cent) and Bajaj Auto (down 5.6 per cent) witnessed the sharpest decline. Tata Motors (down 5 per cent), Maruti Suzuki (down 4.3 per cent), Eicher Motors (down 3.3 per cent) and TVS Motor (down 2.8 per cent) were the other notable losers.

Muted rate cut expectations coupled with rising inventory levels drove down realty stocks during the week. Indiabulls Realty fell the most losing 11 per cent. Other stocks such as Unitech (down 9 per cent), Prestige Estates (down 7.2 per cent) and DLF (down 5.6 per cent) followed suit.

Metal stocks nosedived last week on supply glut concerns for industrial metal products in the Chinese market. Copper major Sterlite Industries was down 14.3 per cent for the week. Other losers include Jindal Steel & Power (down 11.40 per cent), Sesa Goa (down 10 per cent) SAIL (down 7 per cent) Tata Steel (down 6.5 per cent) and Hindalco Industries (down 6.5 per cent).

Punj Lloyd, Lanco Infratech and Adani Ports were down 9.7 per cent, 7 per cent and 1 per cent respectively for the week, on reports that the Home Ministry had barred these companies from bidding for two major port projects on security grounds.

It was a volatile week for HCL Infosystems . The company’s stock price rose earlier in the week on rumors that the Chinese IT giant Lenovo was in talks to buy out the promoters’ stake in the company for Rs 500 crore. However, the stock reversed its gains later in the week after the management denied any such development.

State owned cellular operator MTNL was down 9.6 per cent for the week after Macquarie Bank reportedly sold 20.21 lakh shares on Thursday. The Government owned 56.25 per cent stake in the company as on 30 June 2012.

Shares of the off-shore engineering company, Pipavav Defence , surged 11 per cent for the week after the company announced allotment of 1 crore shares to the promoter group company Grevek Investments & Finance at Rs 78 per share, on conversion of share warrants.

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