Market review: Sensex slips 120 pts after 2 weeks of gains, IT stocks shine

The BSE benchmark Sensex moved down by over 120 points to end to 19,663.64.

Capital goods, consumer durable, FMCG, power, metal and realty stocks were at the receiving end of selling, while IT stocks flared up after India's second largest software services exporter, Infosys, declared better-than-expected Q3 results on Friday and also raised its annual revenue guidance.

Second-line stocks attracted heavy profit-booking by retail investors and underperformed the 30-share Sensex.

The BSE Midcap and Smallcap indices dropped by over 2 per cent.

The Sensex resumed the week on a firm note and immediately touched a fresh two-year high of 19,856.43. It, however, could not maintain the tempo and turned negative as cautious operators and investors went on offloading ahead of Infosys' Q3 results.

The key BSE index later dipped to settle the week at 19,663.64, a fall of 120.44 points, or 0.61 per cent. The Sensex had spurted by 542.08 points, or 2.81 per cent, in the last two weeks.

Similarly, the wide-based 50-issue Nifty of the NSE initially logged a two-year high of 6,042.15. But it succumbed to selling and fell below the 6,000-mark to end at 5,951.30, displaying a loss of 64.85 points, or 1.08 per cent.

Sharp gains registered on Friday in the morning trade due to good Q3 numbers by Infosys were later washed out after the poor industrial production data and fall in exports.

The index of industrial production (IIP) contracted to a four-month low of 0.1 per cent in November as against a robust 8.3 per cent in October (due to a lower base effect and a strong festive season-driven rebound in the manufacturing segment), triggered a bout of profit-booking on Friday.

The sentiment got a further eroded after data showed that India's exports contracted by 1.9 per cent in December, leaving a trade deficit of USD 17.6 billion versus USD 14.7 billion in the same month of previous year.

Tension between India and Pakistan following brutal killing of two soldiers by Pakistani troops along the Line of Control (LoC) in Poonch also had a negative impact on the market.

According to market participants, the Sensex seems to be consolidating near the 20,000-level and Nifty at 6,000-mark before making any move either side.

The market is now looking at the Reserve Bank's monetary policy meeting on January 29 when investors are expecting a cut in key rates after weak economic data.

Foreign Institutional Investors (FIIs) continued their buying spree and pumped in Rs 3,866.38 crore in the market during the week, including provisional data of January 11.

Overall, 20 of the 30 Sensex scrips closed with losses, indicating broad-based sell-off, while others finished with gains.

HUL was the top loser from the Sensex pack, dropping by 6.60 per cent, followed by BHEL 6.29 per cent, L&T 5.91 per cent, Jindal Steel 5.65 per cent, Hindalco 4.15 per cent, Bajaj Auto 3.97 per cent, NTPC 3.87 per cent, Tata Steel 3.80 per cent, HDFC 3.34 per cent, ITC 3.15 per cent, Tata Power 3.00 per cent, Hero Motocorp 2.62 per cent, RIL 2.49 per cent, Sterlite Inds 2.45 per cent, Gail 1.84 per cent, HDFC Bank

1.55 per cent and Cipla dipped 1.30 per cent.

However, Infosys spurted by 15.51 per cent, Tata Motors 4.70 per cent, Wipro 4.02 per cent, ONGC 2.55 per cent and Maruti Suzuki 1.42 per cent.

Among sectoral indices, the BSE-CG dropped by 5.01 per cent, BSE-CD by 4.23 per cent, BSE-FMCG by 3.72 per cent, BSE- Power by 3.19 per cent, BSE-Metal by 3.12 per cent, BSE-Realty by 2.44 per cent and Bankex 1.34 per cent, while the BSE-IT rose by 7.82 per cent, BSE-Teck by 5.63 per cent and BSE-Auto by 0.36 per cent.

The total turnover on the BSE and the NSE improved further to Rs 13,452.18 crore and Rs 64,590.36 crore from last weekend's turnover of Rs 11,432.15 crore and Rs 52,712.07 crore.

Forex: Coming off from six-week low, the rupee washed out all of its last week's losses and appreciated by 31 paise to end at 54.76 against the Greenback during the week under review following fresh dollar selling by exporters and some banks amid sustained capital inflows.

However, weak domestic equities restricted the rise to some extent.

At the Interbank Foreign Exchange (Forex) market, the local unit resumed the week better at 55.00 a dollar from last weekend's close of 55.07 and touched a 6-week low of 55.38 on Tuesday during the intra-day trade.

Later, it recovered at the fag-end from Tuesday and remained firm for the next two days on dollar selling by exporters and some banks, logging a high of 54.40 on early

Friday.

However, it fell back on the same day on weak industrial production data and late selling in equities to settle at 54.76, still showing a rise of 31 paise or 0.56 pct. Last

week, it had dropped by 30 paise or 0.55 pct.

The Indian benchmark sensex moved the week in a narrow range before ending down by 120.44 points or 0.61 pct while Foreign Institutional Investors (FIIs) injected USD 552.52 mln on the first four days of the week, as per Sebi data.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "The rupee recovered its last week losses, ending the week on a firm note. Initially, the INR extended its last week's weakness, tracking weaker tone of domestic equities on falling 2G auction prices.

"Later, it rebounded on dollar selling by exporters. The government's decisions to not expand its FY13 borrowing programme and postpone an auction scheduled for last week boosted gains in INR".

"The Indian Industrial Production numbers though much in line of street expectations posted a miniscule growth on shorter working days due to the festival holidays in November," Brahmbhat said.

The softer stance of Consumer Price Inflation numbers which eased from 9.6 per cent to 9.55 per cent though positive for the economy but is not enough to allow the RBI for a rate cut action in its upcoming policy meet, he added.

"The WPI numbers in the upcoming week shall decide the leg room for RBI to support the government in its efforts to stem growth in economy by initiating rate cut action."

"The government's measures to contain the twin deficits by cutting down on fuel and other subsidies shall no doubt save the sovereigns ratings but lead to spiralling of Inflation numbers which shall again be weakening for rupee," he said.

The RBI fixed the reference rate for US dollar and Euro at 54.5390 and 72.2945 from 54.8458 and 71.5405, respectively in the last weekend.

The rupee premium for the forward dollar ended mixed on alternate bouts of buying and selling.

The benchmark six-month forward dollar payable in June closed lower at 164-166 paise from last weekend's level of 167-1/2-169 paise, while far-forward contract maturing in December finished higher at 314-316 paise from 309-1/2-311 paise last weekend.

The rupee fell back slightly against Pound Sterling to end the week at 88.23 from preceding weekend's level of 88.21 and also dropped sharply against the Euro to finish at 72.61 from last weekend's level of 71.59.

However, it hardened further against the Japanese Yen to close at 61.65 per 100 Yen from 62.40 last weekend.

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