Markets record fourth weekly loss on global growth concerns

The broader markets witnessed selling pressure with both the BSE Mid-cap and Small-cap losing nearly 2% during the week

Benchmark share indices ended lower for the fourth consecutive week amid worries over how the global economic growth would affect India and the possibility of higher interest rates in the US leading to capital outflows from emerging economies.

In the week leading to October 17, the 30-share Sensex ended down 189 points or 0.7 per cent at 26,109 and the 50-share Nifty ended down 80 points or one per cent at 7,780.

However, the broader market witnessed selling pressure with both the BSE mid-cap and small-cap indices losing nearly two per cent during the week.

Foreign portfolio investors were net sellers to the tune of Rs 3,924 crore on all the four trading days of the truncated week, according to provisional stock exchange data.

Wholesale price index (WPI)-based inflation dropped to 2.38 per cent in September this year, the lowest since October 2009 (1.78 per cent). WPI inflation had stood at 7.05 per cent in September 2013 and 3.74 per cent in August this year.

Further, consumer price index (CPI)-based inflation for September fell to 6.46 per cent, the lowest since the series was launched in January 2012 — driven mainly by a significant drop in food prices and subdued demand for industrial goods.

The BSE realty index was the top loser (down 10 per cent), amid sell off in DLF followed by the IT index because of profit taking in TCS.

TCS was the top Sensex loser (down 8.7 per cent) after the IT major reported lower-than-expected earnings, while the management’s forecast of a subdued October-December quarter because of the holiday season also dampened sentiment. The IT major reported nearly six per cent drop in net profit at Rs 5,244 crore for the second quarter ended September 2014, compared to Rs 5,568 crore in the first quarter ended June 2014. Infosys and Wipro ended down 1-3 per cent each.

Metal shares were also among the major losers on concerns that sluggish growth in China, the world's largest consumer, might hurt demand while softening commodity  prices also weighed on investor sentiment. Hindalco slumped 7 per cent and Sesa Sterlite dropped 6.8 per cent.

In the auto sector, Tata Motors and Mahindra & Mahindra ended down 3.4-4.9 per cent each.

Reliance Industries ended down 2.3 per cent after it posted a marginal rise of 1.7 per cent in second-quarter profit. Net profit was Rs 5,972 crore in July-September, up from Rs 5,873 crore a year earlier. However, consolidated net sales declined 4.3 per cent to Rs 1,13,396 crore from Rs 1,18,439 crore for the corresponding quarter of the previous financial year.

Hero MotoCorp ended up 1.3 per cent after it beat Street expectations in the quarter ended September 30. The company posted 59 per cent growth in net profit during the quarter at Rs 763 crore against Rs 481 crore posted in the same quarter last year.

Axis Bank was the top Sensex gainer, up six per cent after it reported a 18 per cent rise in net profit to Rs 1,611 crore in the July-September quarter, compared to Rs 1,362 crore in the same quarter of the previous financial year, helped by higher net interest income and other income.

Bajaj Auto ended up one per cent. The Pune-based company reported net profit of Rs 591 crore for the reporting quarter as against Rs 837 crore reported in the same quarter last year. Bajaj Auto said it was liable to pay Rs 340 crore as a one-time penalty imposed by the Uttarakhand High Court over non-payment of duties.

Tata Steel ended down 0.1 per cent. The steel major signed a memorandum of understanding with the Geneva-based Klesch group for the potential sale of its long products business in Europe and associated distribution activities.

Week Ahead

The truncated week ahead will be dictated by the election results of the Assembly polls in Maharashtra and Haryana on Sunday. Meanwhile, exit polls indicated that the Bharatiya Janata Party is likely to acquire a majority in both the states.

Markets will be closed on Thursday October 23 and Friday October 24. However, stocks exchanges will conduct the traditional muhurat trading session on Thursday evening from 6:15 pm to 7:30 pm.

Companies that will announce their second-quarter earnings include UltraTech Cement, HDFC, HDFC Bank, Kotak Mahindra Bank, Punjab National Bank and Wipro, among others.

On the global front, China is scheduled to release third-quarter GDP data on Tuesday, while the US Federal Open Market Committee will conduct a monetary policy review on October 28 and 29.