Benchmark indices suffered huge losses mirroring a sharp decline in the global equities as participants remained unnerved on worries of a global economic slowdown. Volatility in crude oil prices and weakness in corporate earnings continue to haunt investors resulting in persistent capital outflows.
In the week to February 12, markets recorded the biggest weekly percentage drop since July 2009. The barometer index, the S&P BSE Sensex tanked 1,631 points or 6.6% to settle below the 23,000 level at 22,986.12 and the Nifty 50 plunged 508 points or 6.7% to settle below the 7,000 level at 6,981.
“Overall weakness in corporate earnings, crude correction, liquidity crunch, government paralysis, inability to pass any major reforms such as GST, a tough stance by RBI especially at a time when the world economies are looking at negative interest rates, rising NPA's, etc. are some of the other major reasons to add to the misery of markets,” said Kunal Bothra, Head-Advisory, LKP Securities.
“The best of the bear markets, India has seen, be it the 2000-2001 correction, or the 2008-2009 correction, have lasted for almost a year. We believe similar could be the scenario this time as well. Hence, it is difficult to assign any significant support level in this market, but I believe that even though this downtrend may continue for next few months, it would provide a lot of rallies in between and won't be a one way slide down. The major short term resistance for the week though could be near to 7,250 mark on Nifty, spot levels,” he added.
Federal Reserve Chairwoman in a testimony to Congress stated that global economic turmoil and massive sell-off in global equity markets could spook the US economy.
Back home, India's Gross Domestic Product (GDP) expanded at slower pace of 7.3% in Q3 December 2015 compared with 7.7% growth recorded in Q2 September 2015. However, the GDP growth projection for the financial year 2016 has been revised to 7.6%. But amid the massive sell-off in global equities, investors ignored the growth estimates.
RESULT REACTION & KEY STOCKS
State-run Bharat Heavy Electricals (Bhel) slumped 21.27% after the reported net loss of Rs 1101.99 crore in Q3 December 2015 compared with net profit of Rs 212.60 crore in Q3 December 2014.
ONGC tumbled 12% after the company's net profit fell 64% to Rs 1286 crore on 2.28% decline in gross revenue to Rs 18547 crore in Q3 December 2015 over Q3 December 2014.
Adani Ports and Special Economic Zone (APSEZ) lost 15%. The company's consolidated net profit rose 25.95% to Rs 644.96 crore on 11.27% increase in total income to Rs 1895.75 crore in Q3 December 2015 over Q3 December 2014.
In the healthcare space, Dr Reddy's Lab declined 8% after the company's net profit rose 0.82% to Rs 579.20 crore on 2.6% increase in total income to Rs 3980 crore in Q3 December 2015 over Q3 December 2014.
However, Sun Pharma ended flat after the company's consolidated net profit surged 258% to Rs 1416 crore on 6.5% increase in total income to Rs 7301 crore in Q3 December 2015 over Q3 December 2014.
Cipla lost 7%. The company's consolidated net profit rose 4.68% to Rs 343.20 crore on 12.33% growth in net total income from operations to Rs 3106.55 crore in Q3 December 2015 over Q3 December 2014.
Auto stocks hogged limelight this week. Tata Motors tumbled 11% after the consolidated net profit fell 2% to Rs 3507 crore on 2.8% growth in total income to Rs 72437.02 crore in Q3 December 2015 over Q3 December 2014. Meanwhile, Hero MotoCorp and M&M lost 4%.
Coal India lost 7%. The company's consolidated net profit rose 14% on 5.05% growth in total income to Rs 20953.35 crore in Q3 December 2015 over Q3 December 2014.
GAIL (India) lost 5%. The company's net profit rose 10% to Rs 664 crore on 9.27% decline in total income to Rs 13708.49 crore in Q3 December 2015 over Q3 December 2014.
Public sector banks declined across the exchanges triggered by worries about sticky loans. Among private banks, Axis Bank, HDFC Bank and ICICI Bank lost up to 8%. SBI lost 8% after net profit fell 61.67% to Rs 1115.34 crore.
Among other prominent stocks, Bharti Airtel was the lone gainer among the 30-share Sensex pack up 6%. Meanwhile, Asian Paints (down 4.57%), HDFC (down 8.45%), Hindustan Unilever (down 4.01%), ITC (down 7.3%), L&T (down 7.54%), NTPC (down 0.52%), Reliance Industries (down 6.78%) and Tata Steel (down 6.9%) edged lower from the Sensex pack.
WEEK AHEAD
Shares of public sector oil marketing companies (PSU OMCs) will be in focus as a regular fuel price review is due during the middle of the month.
Markets are likely to react to the consumer price inflation for January 2016 and industrial production data for the month of December 2015 on Monday. Index of industrial production (IIP) contracted an annual 1.3% in December Meanwhile, annual consumer price inflation edged up to a 17-month high of 5.69% in January, driven up by higher food costs, government data showed on Friday.
Data on inflation based on the wholesale price index (WPI) for January 2016 is due to be released by the government on Monday, 15 February 2016.
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