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Chill on Dalal Street continues; Sensex slips 93 points, Infy shines

The first full trading week of the new year failed to bring any cheers to the market which remained in the grips of selling and IT major Infosys' better-than-expected Q3 result was the only bright spot.

business Updated: Jan 11, 2014 17:27 IST

The first full trading week of the new year failed to bring any cheers to the market which remained in the grips of selling and IT major Infosys' better-than-expected Q3 result was the only bright spot.

The benchmark S&P BSE Sensex extended its losses for the second consecutive week, dropping another 93 points on persistent selling pressure due to slowdown in foreign capital inflows coupled with strong US private-sector employment report which may encourage Federal Reserve to taper its bond-buying programme.

Contraction in India's services sector, whose contribution to GDP had been growing consistently, last month also dented the market sentiment.

The HSBC/Markit Purchasing Managers Index for the services industry fell to 46.7 in December from 47.2 in November as new orders declined. It was the sixth consecutive monthly drop in output and the longest period of continuous reduction since the 2008/2009 global financial crisis.

Shares of realty, capital goods, banking, consumer durable, power and metal sectors declined, while healthcare, FMCG, IT and tech shares firmed up on good buying enquiries.

The Sensex opened strong at 20,913.79 and moved up further to 20,971.23 on good buying from investors. However, the 30-share index fell afterwards to 20,625.17 on profit- booking before concluding at 20,758.49, posting a loss of 92.84 points, or 0.45%, over the last weekend.

The key BSE barometer has lost 435.09 points, or 2.05%, in the last two weeks.

The NSE benchmark Nifty moved down by 39.70 points, or 0.64%, to settle at 6,171.45. The 50-share index has dropped 142.35 points, or 2.25%, in the last two weeks.

Infosys shares ended lower by 0.47% on weekly basis after surging 2.84% on Friday as company posted 21.4% rise in net profit for the third quarter and raising its revenue growth forecast for the next fiscal.

Second-line stocks continued to attract profit-booking by retail investors. The S&P BSE Midcap index dropped further by 1.17%.

Local sentiment was affected after foreign funds sold equities for the first time this year. Foreign institutional investors sold shares worth a net Rs 381.34 crore during the week as per the Sebi's data including the provisional figure of January 10.

Jignesh Chaudhary, head of research, Veracity Broking Services, said, "It was a pretty stressful and negative week for Indian equity markets where they traded weak and flat for almost better part of the week."

In the entire week, markets witnessed some deep selling pressures in the blue-chip stocks and also felt the pressure of the weak Asian markets. The FII community showed more interest in the debt segment then the equities segment where they invested over $800 million this week, he said.

"Markets are now keenly awaiting the Inflation data due later on Monday, 13th of January 2014, for further direction. Trading range of BSE Sensex is expected to be in 20,300 to 21,000, CNX Nifty 6110 to 6320," he added.

Other major losers from the sensex were Axis Bank 8.25%, Tata Steel 7.36%, Hindalco 7.42%, SBI 6.67%, Larsen 5.88%, Tata Power 4.54%, ICICI Bank 4.14%, Hero Motocorp 3.28% and M&M 2.93%.

However, Dr Reddy's Lab rose by 4.88%, Sunpharma 4.88%, Coal India 3.79%, ONGC 2.82%, TCS 2.62%, ITC 2.36%, Gail India 1.78%, Cipla 1.54%, Tata Motor 1.48% and HDFC 1.25%.

Among the S&P BSE sectoral indices, Realty fell by 6.49%, CG 4.00%, Bankex 3.42%, Power 2.93%, CD 2.11% and Metal 1.72% while HC rose by 3.02%, FMCG 1.41%, IT 0.91% and Teck 0.66%.

The total turnover at BSE and NSE rose to Rs 11,663.44 crores and Rs 59,964.52 crores during the week respectively as against the last weekend's level of Rs 10,486.82 crore and Rs 46,164.73 crore.

Forex: The rupee recovered by 26 paise to close the week below 62-mark after more than a week at 61.90 against the greenback following renewed dollar selling by exporters and some banks amid fresh capital outflows.

However, weakness in local equities restricted the rupee rise to some extent.

At the Interbank Foreign Exchange market, the domestic currency commenced lower at 62.35 a dollar from last weekend's close of 62.16 and touched a low of 62.47 on bearish local stocks and importer demand for the US unit.

It, later, recovered on dollar selling by exporters and some banks amid firming euro against the dollar after data showed a pullback of euro-zone inflation. It touched a high of 61.83 before concluding the week at 61.90, showing a rise of 26 paise or 0.42%. Last week, it had tumbled by 31 paise or 0.50%.

The benchmark S&P BSE Sensex closed the week down by almost 93 points or 0.45%, extending losses for the second straight week while FIIs pulled out $71.94 million in the first four days of the week, as per Sebi data.

Jignesh Chaudhary, Head Of Research, Veracity Broking Services, said, "The rupee had a pretty eventful week where it traded in the range of about 61.80 levels to 62.45 levels for the better part of the week before ending on a positive note above 62 levels."

"The rupee initially tracked a weak equity and traded negative well above 62 levels, before finally getting some respite from fresh funds inflow from the FII community who took some decent positions in the Indian debt markets and also due to aggressive dollar selling by some banks at 62.30 levels. This helped the rupee to correct from its weakness," he said.

"Indian Rupee is now going to take further cues from the inflation data scheduled to be released later on Monday, 13th of January 2014 and is expected to trade in the range of Rs 61.20 to 62.80 levels in the following week," he added.

Meanwhile, dashing hopes of recovery, factory output, as measured in terms of the Index of Industrial Production (IIP) contracted by 2.1% in November, the lowest in six months, from 1.57% (revised) for October. The previous low in IIP was recorded at (-) 2.5% in May 2013.

The rupee premium for the forward dollar remained weak on sustained receipts by exporteRs The benchmark six-month forward dollar premium payable in June dropped to 231-233 paise from last weekend's close of 247-249 paise and far-forward contracts maturing in December also slipped to 466-468 paise from 486-488 paise.

The RBI fixed the reference rate for the US dollar at 61.9360 and for the euro to 84.3050 from 62.4075 and 85.1950 last weekend, respectively.

The rupee bounced back against the pound sterling to 101.65 from last weekend's close of 102.33 and also recovered against the Japanese yen to 58.96 per 100 yen from previous weekend's close of 59.51.

However, it hardened further against the euro to 84.17 from preceding weekend's close of 84.79.

Oils and oilseeds: Edible oils declined, while linseed oil gained at the oils and oilseeds market during the week under review.

Groundnut oil dropped on further selling by stockists on the back of poor retail demand and ample supply positions.

Refined palmolein also fell due lower retail buying support amid bearish Malaysian cues.

Linseed oil gained moderately on fresh demand from paint and allied industries.

Castorseeds bold and castoroil commercial traded mostly tight range and managed to end stable following listless demand from shippers and soap industries.

In the edible oils segment, groundnut oil opened steady at Rs 800 and declined further to close at Rs 780 from previous weekend level of Rs 800 per 10 kg, showing a fall of Rs 20.

First Published: Jan 11, 2014 16:44 IST