Weekly Report: Markets falter on growth concerns

The euphoric rally seen in the Indian stock markets last week came to an abrupt end as investors turned cautious after the government cut economic growth forecast, political uncertainty over policy reforms and European debt crisis.

In the truncated week ended December 9, the Sensex ended down 3.8% at 16,213 and the Nifty lost 3.7% to end at 4,867.

Last week, both the benchmark share indices had gained over 7% each. The Sensex had recorded its best weekly gain since July 2009.

Benchmark share indices snapped a three-day winning streak to end marginally lower Monday after the government put its decision to allow multi-brand retail on hold. The Sensex fell 0.3% and the Nifty ended 0.2% lower.

Stock exchanges remained closed for trading on Tuesday on account of Moharrum.

Wednesday witnessed a trend reversal and markets ended marginally higher, paring sharp intra-day gains, after profit booking was seen in late trades because of growth concerns.
Profit booking was seen after the Finance Minister Pranab Mukherjee said that India's growth target of 9% remains a pipe dream.The Sensex topped the 17,000 mark in intra-day for the first time since November 15, 2011 to finally end up 72 points at 16877. It reached an intra-day high of 17,004 levels. The Nifty gained 23 points to end at 5,063 after touching nearly 5,100 in intraday trades.

Indian shares ended over 2.3% down on Thursday, shrugging off firm European cues and moderating food inflation, after uncertainty over policy reforms continued to weigh on market sentiment.The Central Government formally put on hold the cabinet decision to allow up to 51% foreign direct investment (FDI) in multi-brand retail also weighed on market sentiment. The Sensex ended down 389 points or 2.3% at 16,488 and the Nifty ended down 119 points or 2.3% at 4,944.

Friday, shares fell sharply for the second straight session after the government cut economic growth forecast for fiscal 2012 and said meeting fiscal targets would be a challenge. In a mid-year economic review presented in parliament, the government said the economy is expected to grow around 7.5 per cent, sharply lower than the original estimate of 9 per cent. The government also said meeting its fiscal targets would be a challenge in a slowing domestic economy and uncertain global environment as it slashed its economic growth forecast for FY12. The BSE Sensex ended shed 275 points or 1.7% at 16,214 and the Nifty ended at 4,867, down 77 points or 1.6%.

The decline in the markets this week was led by capital goods shares on reports that the segment would lead the decline in industrial output in October. The BSE Capital Goods Index declined 5.4%. BHEL and L&T both ended 6.5% lower. The data for October industrial output will be released on Monday, December 12.

Apart from capital goods sector, oil and gas, power and metal shares were among the top losers. The BSE Power, BSE Oil&Gas and BSE Metal Indices all ended over 4.3% down. Index heavyweight Reliance Industries ended down 6.8%. Among metal shares, Sterlite, Sesa Goa and NMDC alllost over 7% each while Tata Steel shed 4.9%. In the power sector, NTPC close 3.5% lower. In the banking space, ICICI Bank eased 7% and HDFC Bank ended 4.5% lower.

The broader market also lost ground with the BSE Mid-cap lost 2.5% and BSE Small-cap ended lower by 2.2%.

Among the BSE Mid-cap, Indiabulls Real Estate lost 19%, Pantaloon Retail 15% and VIP Industries ended down 18%.

In the small-cap segment, Balaji Telefilms eased 13.2% and Edserv Softsystems declined 18%.