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Indices lose ground in a week of FII sell-off

The markets shrugged off positive data and slumped due to weakness in global equities and aggressive selling by foreign institutional investors (FIIs) in the week ended Friday. Investors remained cautious as they feared the US Federal Reserve might raise interest rates.

The market registered a decline in three of the four trading sessions. For the week, the S&P BSE Sensex slipped 2.5 per cent or 645.9 points, to end at 25,480.84. The CNX Nifty lost 2.4 per cent or 187.85 points, to end at 7,602.60.  Both the benchmark share indices ended at their lowest close since July 15.

The broader markets also edged lower but outperformed the benchmarks. The BSE mid-cap index dipped 0.7 per cent and the small-cap one by nearly 1.5 per cent.

The US economy added 209,000 new jobs in July, showed the latest report.

Early data from the stock exchanges showed on Friday and Thursday, FIIs sold shares worth about Rs 2,600 crore. They have about $ 12 billion of investment in the Indian markets.

Economy
Manufacturing activities in India this July rose the most in 17 months on increased orders, according to the HSBC Purchasing Managers’ Index (PMI). Also, the official PMI issued by the Chinese government climbed to a 27-month high of 51.7 in July, beating forecasts for 51.4.

US Secretary of State John Kerry told Prime Minister Narendra Modi on Friday that India’s refusal to sign a global trade deal sent a wrong signal and urged Delhi to resolve the difference as soon as possible.

Sectors, stocks
Among the sectoral indices, the BSE capital goods index fell nearly eight per cent. Oil and gas, metals, power, realty, consumer durables, information technology (IT), automobile and the Bankex indices all slipped by one to three per cent each. The fast moving consumer goods (FMCG) index dipped 0.5 per cent, while heathcare ended flat, with a positive bias.

Larsen & Toubro, the capital goods major, fell a little above 11 per cent during the week, after reporting consolidated net profit of Rs 967 crore for the quarter ended June, mainly on account of a one-time gain of Rs 249 crore on disinvestment and stake sale in one of its project.

ITC dipped about two per cent on profit taking. The stock had gained 1.4 per cent on July 30, after its cigarette business’ revenues grew 18.8 per cent year-on-year to Rs 4,201 crore and the Ebit (earnings before interest and tax) margin went up 142 basis points to 64.8 per cent for the first quarter. The country’s largest cigarette maker reported a better-than-expected 25 per cent rise over a year in quarterly sales, to Rs 9,160 crore, against Rs 7,339 crore in June 2013. Sales growth was the highest since the March 2010 quarter.  

FMCG giant Hindustan Unilever surged a little over five per cent. It reported a 3.7 per cent increase in net profit at Rs 1,057 crore for the quarter. It was Rs 1,020 crore in the same period a year before.

Index heavyweight Reliance Industries plunged about four per cent after the oil and gas major said it was open to offloading up to 30 per cent in its telecom venture, Reliance Jio, to a global strategic partner, a move to unlock value. However, this would be done only after the telecom company acquired a sizable customer base.

Oil and Natural Gas Corporation fell 3.5 per cent and GAIL by 1.5 per cent.

In contrast, telecom major Bharti Airtel rallied seven per cent after reporting a 61 per cent jump over a year in consolidated net profit at Rs 1,108 crore for the quarter, backed by a 74 per cent rise in mobile data revenue. It had crossed the 300-million customer mark across its mobile, fixed line, DSL and DTH services,it stated on Monday.

Tata Motors slumped nearly five per cent, after the company reported a 26.9 per cent decline in total sales last month at 149,597 units, as against 204,744 units in July 2013. Reports that its European arm, Jaguar Land Rover, had reduced prices on three of its high-end models in response to a pricing and anti-monopoly investigation in China also caused the scrip to end lower.

Similarly, Mahindra & Mahindra slipped nearly three per cent after the automobile maker major reported a 4.1 per cent decline in total sales at 35,567 units in July.

However, Maruti Suzuki gained three per cent after the company reported a 19.9 per cent rise in domestic sales at 90,093 units in July, as against 75,145 units in the same month last year. Hero MotoCorp edged up nearly one per cent after it reported a nine per cent rise in sales to 529,000 units in July 2014 over July 2013.

IT stocks also ended in the red. Wipro and Tata Consultancy Services ended between two and 3.5 per cent lower; Infosys slipped 0.4 per cent.

Metal stocks ended lower, with Coal India, Sesa Sterlite, Hindalco and Tata Steel all down by one to 4.5 per cent.

Among stocks of power companies, Tata Power and NTPC shed five to six per cent.

Stocks of State Bank of India, Axis Bank and the HDFC twins ended down by two per cent; ICICI Bank ended flat, with a positive note.

Week ahead
Reserve Bank of India policy review on Tuesday.

Quarter results: Hero MotoCorp, M&M, State Bank of India, Power Grid, Apollo Tyres, Jubilant Food Works.

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