The primary market seems to have found its lost vigour. Brimming with new and substantial fund-raising each week, it is once again on road to becoming the most sought after investment destination. The week ended October 30th witnessed heavy over subscription of much anticipated IPOs of both InterGlobe Aviation Ltd. (Indigo Airlines) and SH Kelkar & Company.
The same, however, does not hold true for the secondary markets. They seem to be losing their sheen. The BSE Benchmark Index, Sensex, fell for the fifth straight day on Friday, closing at 26,656.83, decling 0.68%. This week marked an end to a six week winning streak, as some of country’s biggest corporates missed quarterly earnings estimates.
On a weekly basis, the Sensex lost 813.98 points, and the NSE Nifty tumbled 229.70 points, nearly 3 per cent each – their worst weekly performance since week ended September 4, 2015.
Sensex this week
The performance of Sensex stocks this week
Weak corporate earnings, renewed hopes of a rate hike in the US by the Federal Reserve, softer commodity prices, and fear of a lower credit growth combined spooked the market participants.
As can be seen from the graphic above, among the 30 Sensex shares, 20 declined and only 10 rose.
Axis Bank, Lupin, ITC, L&T, Coal India were the top 5 losers. Among the 30 Sensex shares, 20 declined and just 10 rose.
Earnings this Week –
Axis Bank was the biggest Sensex loser this week declining almost 10%. Though the bank’s net profit rose 19% to Rs 1,916 crores for Q2, there was a fall in the share price on account of classification of two power sector exposures worth Rs 1,820 crore as non-performing assets (NPAs) and there subsequent sale to asset restructuring companies (ARC).
Lupin was down by over 7%. The company reported a 35% fall in its net profit in Q2 because of delays in product approvals and increased expenses.
ITC tumbled the most in 5 months, after lower than expected earnings. L&T too closed in red, lowest since May 2014, after reporting lower than expected order book and revenue guidance, from 15% to 7%.
Weakness in commodity prices in global markets impacted earnings of Vedanta, which slipped over 2% and posted a 40% decline in its net profits.
Maruti Suzuki and Dr. Reddy’s were two of the outliers advancing 2% and 1.5% respectively after exceeding estimated financial parameters.
The FIIs have bought stocks worth more than $900 million this month, while they were net sellers in September amounting to $2 billion.
Markets Next Week –
Among Q2 corporate earnings, SBI, Tata Steel, Cipla, BHEL, Tata Motors, ONGC, DLF, Indian Oil Corporation, Ashok Leyland, Bank of Baroda will announce the results in the coming week.
On the global front, China’s Manufacturing PMI, US Unemployment Rate report will be unveiled.
India’s growth engine is yet to pick its pace. Till now weak earnings have over-shadowed Indian markets. Furthermore, results of Bihar assembly polls and efficiency of the upcoming winter session of Parliament will impact markets’ near term performance among other factors.