Below-expected numbers weigh heavy on markets (Weekly Review)

Negative global and local cues like uncertainty over the future of Greece in the Eurozone and below-expected quarterly numbers led a benchmark of Indian equities markets to fall 465.04 points or 1.59 percent during the week ended Feb 6.

According to market observers, the negative movement in the Indian equities markets was led by below-expected quarterly numbers especially from the public sector banks and the Reserve Bank of India's decision to keep policy rates unchanged.

"Markets were down for the week. Below-expected quarterly numbers were largely responsible for the same," said Dipen Shah, head, private client group research, Kotak Securities.

"The PSU bank numbers raised concerns over their asset quality. Tata Motors' results also failed to meet expectations. RBI kept policy rates unchanged, in line with expectations."

Shah added that: "Going ahead, markets will focus on the outcome of Delhi assembly elections, remaining quarterly numbers and the budget. A growth-oriented budget with structural reforms will lead to further re-rating of the markets. However, any disappointment in the budget will be a negative for the markets."

For the week ended Feb 6, the benchmark 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE) was down 465.04 points or 1.59 percent in the weekly trade.

The barometer index closed at 28,717.91 points, while it had ended trade at 29,182.95 points on Jan 30.

In the weekly trade ended Jan 30 the benchmark index was down 95.89 points or 0.32 percent at 29,182.95 points, while it had ended trade at 29,278.84 points on Jan 23.

Other analysts did not rule out a possibility of a per budget rally around the budget time. Sharp moves and high volatility is expected in the last week of February due to F&O (future and options) expiry as well as rail and union budget.

"Budget is poised to increase household saving & investment, job creation and Capex, enabled by next generation reforms to fast-track India's economic resurgence," said Vinod Nair, head - fundamental research, Geojit BNP Paribas.

"Based on this factor, there is a high possibility to provide advantage to Mid & Small caps as business risk reduces; demand improves with added feather of cost control."

Nair further said that a pro-growth budget can lead foreign institutional investors (FII's) to improve exposure outside top 100 stocks in India.

"RBI is also waiting to understand how budget will impact the economy. They are ready to create right platform to better liquidity as capex revives. We can expect more rate cuts post budget," Nair added.

Market insiders point out that the next major trigger for the markets in the coming week will be data point on the domestic front such as gross domestic product (GDP) numbers on Feb 9.

This will be followed by export/import data on the Feb 10 and indexof industrial production (IIP) and consumer price index (CPI) numbers on Feb 12. These data points may also give a directional call on the RBI move for the next credit policy.

On Friday, S&P BSE Sensex closed the day's trade at 28,717.91 points, down 133.06 points or 0.46 percent from the previous day's close at 28,850.97 points.

The major Sensex gainers on Friday were: HDFC, up 2.45 percent at Rs.1,279.50; Infoysy, up 1.63 percent at Rs.2,229.35; Seas Sterlite, up 1.35 percent at Rs.210.60; ITC, up 1.32 percent at Rs.373.50; and Bharti Airtel, up 1.14 percent at Rs.367.55.

The losers were Tata Motors, down 5.05 percent at Rs.559.75; BHEL, down 4.79 percent at Rs.264.20; Sun Pharma, down 2.98 percent at Rs.928.60; Tata Steel, down 2.67 percent at Rs.369.30; and Mahindra and Mahindra, down 2.59 percent at Rs.1,149.20.