Weekly: Markets slump over 2% amid political concerns

Meanwhile, broader markets outperform with the mid and smallcap indices up 0.04-1.8%

Benchmark indices share indices slumped over 2% in the week to April 5  amid continued political uncertainty and basket-selling by foreign institutional investors.

For the week ended April 5, the Sensex slumped 2.05%, to 18,450 and the Nifty dropped 2.28%, to close at 5,553.

Markets witnessed a sell-off in late trades on Wednesday as possibility of early elections this year dampened sentiment.

The FIIs were sellers in the capital market segment on Thursday 04 April 2013, sold shares worth Rs 326.21 crore as per the provisional data from the stock exchanges. On the other hand the DIIs changed to buyers on 04 April 2013, bought shares worth RS 64.73 crore as per the provisional data from the stock exchanges.

However, the broader markets bucked the trend and ended higher. The Mid-cap index gained 0.04%, to 6,144 and the Small-cap index added 1.89%, to 5,914.

There was weakness in the global markets too as the US jobless claims shot up to a four month high along with the service industry expanding at a slower pace than expected.  

Back home, on the macro front, Growth in India’s services sector fell to a 17-month low in March, showed the HSBC purchasing managers’ index (PMI). If official data matches the PMI reading, then government’s hopes of an economic recovery in the quarter ended March would be dashed.

Another worrying data was Q3 FY13 current account deficit which touched a record high of 6.7% of GDP on account of larger trade deficit.

Among the sectoral indices, only HealthCare, Oil & Gas, PSU and Power indices manged to close in the green, gaining 0.04-2.5%.

Meanwhile, FMCG index was the top sectoral loser, coming off 3.3% for the week followed by Metals, Auto, IT, Bankex, Consumer Durables and Capital Goods which ended down 1.1-2.7%.

Auto stocks slipped lower during the week on account of poor sales figures. Bajaj Auto, Tata Motors and Hero MotoCorp down 4-5% were among top Sensex losers.

The other notable losers were Bharti Airtel, HDFC, ITC, Sterlite, TCS, ICICI Bank and Jindal Steel lost between 4-7%.

On the gaining side were Maruti Suzuki which advanced nearly 10% as a weaker yen would help the company improve margins by reducung the cost of import of auto parts from Japan.

Power stocks were in spotlight following the CERC judgment allowing “compensatory tariff&" to Adani Power’s imported coal-based Mundra project.

Pharma stocks saw a run up with names like Dr. Reddy's, Sun Pharma and Cipla gaining 2-8%.

In the Oil & Gas space, Reliance Industries and ONGC lead the gains as each of them gained 1% each.

WIpro, Hindustan Unilever and BHEL gaining 0.4-4% were the other notable gainers.

Sugar stocks too saw some movement following the government’s decision to abolish levy mechanism to set the market under partial decontrol. The decision is set to improve cash flow of sugar mills resulting into an estimated 3% additional profit this year.

One of the major business development for the week was a deal between the Ambani brothers since their split in 2005. Mukesh Ambani’s Reliance Jio, which will offer 4G services, signed an agreement with Reliance Communications, controlled by his younger brother Anil Ambani, to use the latter’s fiber-optic network for a one-time payment of Rs 1,200 crore.

Further, according to market sources, Mukesh Ambani-led Reliance Industries invested more that Rs 800 crore in fixed maturity plans and other debt schemes of Reliance Mutual Fund led by Anil Ambani.

According to Alex Mathews, Head Research, Geojit BNP Paribas Financial Services, the next trigger for the Indian markets will be the IIP data for the month February 2012 and the corporate earnings of INFY which is due on 12 April 2013.