Sensex posts biggest weekly loss since December 2011
Benchmark share indices which had rallied to all-time highs finally succumbed to profit taking amid lack of major reforms announcement in the Budget and the uncertainty over implementation of the controversial General Anti-Avoidance Rules led to a sell off in the eventful week ended July 11.
For the week ended July 11, the Sensex ended down 938 points or 3.6% at 25, 024 posting its biggest weekly loss since December 2011 while the Nifty closed 292 points or 3.8% at 7,460 recording its largest weekly loss since March 2013.
Selling pressure was also seen in the broader market with the BSE Mid-cap index down 7% and the Small-cap index ended 7.8% lower.
The Finance Minister Arun Jaitley presented the Union Budget on July 10 by promising to limit fiscal deficit at 4.1% of GDP for the current fiscal, raised the income-tax threshold for individual tax payers, hiked the foreign direct investment in insurance and defence sectors to 49% and also proposed to sell partial stake in state-owned banks.
Industrial output in May grew by 4.7 per cent, the highest monthly rise since October 2012, giving further momentum to a 3.4 per cent rise in April and raising hope of a recovery.
Stocks from sectors such as Capital Goods, Power, Realty, Bankex, Oil and Gas, Auto and Metal indices which had surged in the run-up to the Budget were among the most hit while the defensive IT and FMCG indices ended with marginal gains.
The BSE Power index was the top loser down 10.2% followed by Capital Goods index 10%, Realty index lost 9.2%, Consumer Durables 8.2%, Metal and Bankex down over 7% each while the Auto, Oil and Gas indices ended nearly 6% lower.
Investors also booked profits in capital goods and auto shares which had surged after the Government extended an excise duty concession by six months till December 31, 2014. State-owned BHEL was the top Sensex loser during the week under review down 15% while engineering major L&T closed 10.3% lower.
Auto shares which had gained post June sales numbers also witnessed profit taking. Bajaj Auto, Hero MotoCorp, Maruti Suzuki, M&M ended down 5-7% each.
State-owned banks also faced selling pressure after the Budget proposed to reduce its stake in the public sector banks. SBI ended down 10.3%, Punjab National Bank eased 10.8% while Bank of Baroda ended 10.6% lower. Among the private banks, ICICI Bank ended down 7.3%, Axis Bank fell 6.2% and HDFC Bank ended down 5.2%.
Power stocks also witnessed profit taking after sharp gains recently. PTC India, Reliance Infra, Reliance Power, Tata Power, NHPC and NTPC ended down 1-8.5% each.
ITC ended up 3.8%. As per the Budget proposals specific excise duty on cigarettes in the range of 11-72%.
Infosys ended up 2.7% after the company reported a better-than-expected consolidated net profit at Rs 2,886 crore for the first quarter ended June 30, 2014 (Q1). Analysts, on an average, had expected profit of Rs 2,698 crore for the quarter. The company had reported a profit of Rs 2,992 crore in the March 2014 quarter.
Some of the mid-cap shares which witnessed a sell-off include, Unitech, Apollo Tyres, Andhra Bank, RCF and Jain Irrigation down 19-23% each.
In the small-cap segment, Texmaco Rail, TBZ, PC Jeweller and Bombay Dyeing ended down 17-28% each.