Weekly: Winning streak halts on fresh RBI measures

Indian markets snapped their four-week winning streak as the additional liquidity restrictions imposed by the Reserve Bank of India to curb the decline in Rupee

Benchmark share indices snapped their four-week winning streak as the additional liquidity restrictions imposed by the Reserve Bank of India to curb the decline in Rupee against the US dollar led to a sell off in bank shares. Also, the global sentiments wavered through the past five trading sessions.

For the week ended July 26th, the 30 share S&P BSE Sensex fell 402 points or 1.99% to 19,748 and the 50 unit CNX Nifty fell 143 points or 2.37% to end the week below the 6,000 levels at 5,886.

The sell-off was more prominent in the broader markets with both the mid and smallcap indices losing between 3-3.5% for the week.

The additional measues taken by the Reserve Bank of India triggered the sell-off on Wednesday, when the Central Bank post market hours on Tuesday announced that the total quantum of funds available under liquidity adjustment facility (LAF)has been capped to 0.5% (lowered from 1%) of individual bank’s net deposits and time liabilities (NDTL), which would be effective from July 24, 2013.

Also,the earlier imposed cap on overall allocation of funds at Rs 75,000 crore under LAF stands withdrawn. It has also increased the requirement of minimum daily cash reserve ratio (CRR) maintenance to 99% from 70%, which would be effective from first day of fortnight beginning July 27, 2013.

 
As a result of these measure, banking stocks were among the top losers for the week. HDFC Bank, ICICI Bank and State Bank of India lost 2.7-5.3%.

Among the sectoal indices, the only ones to close in the positive territory were IT and Teck, which gained 2% and 1.7% respectively.

From the ones to close in the negative, Capital Goods index was the top loser, down over 10%.This fall come of the back of step cuts in leading names like L&T and BHEL which touched their 52-week lows in intra-day trades. L&T was the top Sensex loser, as the stock slumped over 13% after the company reported a 12% decline in net profit.

Other sectors like Metals, Bankex, PSU, Power, Oil & Gas and Realty too gave off 2-7%.

Apart form capital goods, the draggers among the Sensex-30 stocks were metal names like Jindal Steel, Tata Steel, Hindalco and Sterlite losing 7.5-10%.

Maruti Suzuki,Coal India, GAIL India, ONGC, Tata Power and Reliance Industries down 3.5-6% were the other notable losers.

FMCG majors ITC and Hindustan Unilever too closed in the red, as a result of a not-so-encouraging set of numbers.ITC was down 0.1% and HUL declined 3.4%.

Manwhile, among the nine gaining stock from the Sensex-30 were auto names like Hero MotoCorp, Bajaj Auto and Mahindra & Mahindra which gained nearly 2-5% as all these companies managed to report decent Q1 numbers inspite of the slugishness in auto industry.

IT heavyweights Infosys and TCS gained 2.4% and 1.7% respectively.

Sun Pharma and Bharti Airtel were the other major gainers, up 2-3.5%.

In international markets, fears of QE easing out come to fore once again, after the United States put forth stronger-than-expected economic data.

Going ahead, the markets will take cues from the monetary policy to be held next week along with quarterly numbers from major companies like Dr Reddy, Sun Pharma, ICICI Bank, HCL Tech, NTPC and Bharti Airtel.