BSE / NSE Weekly Analysis for the week ending 21 Oct 2011
The
market declined for the week ended 21 st October 2011 due to trailing
weakness in global shares caused by disappointment over the pace of
European rescue plan. Investors feared building fresh positions as data
showing acceleration of food inflation early this month raised
prospects of more rate hikes from the central bank to tame inflation,
which remains uncomfortably high. Stock specific action was witnessed
as most index heavyweights announced their results for the quarter
ending September 2011.
Foreign
institutional investors (FIIs) outflow in October 2011 totaled Rs
675.20 crore (19th October 2011). FII outflow in calendar 2011 totaled
Rs 966.80 crore (19th October 2011).
Indices Review
The
BSE Sensex fell 297.05 points or 1.74% to settle at 16,785.64 in the
week ended Friday, 21 October 2011. The 50 shares S&P CNX Nifty fell
82.35 points or 1.60% to 5,049.95
The
market declined this week, trailing weakness in global shares caused by
disappointment over speed of European rescue plan. Investors feared
building fresh positions as data showing acceleration of food inflation
early this month raised prospects of more rate hikes from the central
bank to tame inflation, which remains uncomfortably high. Stock specific
action was witnessed as most index heavyweights announced their
June-September 2011 quarter results.
Foreign
institutional investors (FIIs) outflow in October 2011 totaled Rs
675.20 crore (till 19 October 2011). FII outflow in calendar 2011
totaled Rs 966.80 crore (till 19 October 2011).
Inflation,
as measured by the wholesale price index (WPI), rose 9.72% in September
2011, compared with a 9.78% rise in August 2011, data released by the
government on 14 October 2011, showed. WPI inflation for July 2011 was
revised upwards to 9.36% from the provisional reading of 9.22%.
Trading for the week began on a weak note. The BSE Sensex
Trading for the week began on a weak note. The BSE Sensex
fell
1.74% to settle at 16,785.64 in the week ended Friday, 21 October 2011.
The 50 shares S&P CNX Nifty fell 1.60% to 5,049.95. The BSE Mid-Cap
index fell 1.26% and the BSE Small-Cap index fell 1.20%. Both these
indices outperformed the Sensex.
Sectoral Review
Capital Goods:
The
BSE Capital Goods index fell 4.38% to close at 10,558. Among the
heavyweights in the industry Crompton Greaves, L&T, BHEL &
Siemens fell 14.0%, 5.1%, 4.1% & 2.6% respectively. Disappointing
L&T Q2 numbers dragged the gauges in the negative zone. L&T
tumbled 5.1% to Rs
1336 after the company cut its order growth guidance for the current
fiscal year to 5%, from 15% earlier. Order flow is being hampered by
investment slowdown, project deferrals and higher competition
IT:
The
BSE IT index fell 3.04% in the week to close at 5,526 levels. TCS, HCL
Tech, Wipro, and Infosys fell 7.6%, 6.4% 2.6% and 0.8% espectively. TCS
was the top loser this week. The stock declined 7.60% to Rs 1048.25
after disappointing Q2 results, which the company announced after market
hours on Monday, 17 October 2011. TCS chief financial officer and
executive director S Mahalingam on Tuesday, 18 October 2011, said that
TCS would cut costs and focus on high-margin services to maintain its
profitability in the traditionally weak October-December quarter. TCS'
consolidated net profit fell 4.7% to Rs 2301 crore on 7.7% growth in
revenue to Rs 11633 crore in Q2 September 2011 over Q1 June 2011.
Realty:
The
BSE Realty index fell 2.96% to close at 1,773 levels. HDIL, Indiabuls
Real Estate, DLF, Unitech and fell 8.1%, 7.3%, 3.1% and 2.4%
respectively. DLF declined 3.1% to Rs 225.05 after the Securities and
Exchange Board of India (Sebi) said on Thursday, 20 October 2011, that
it would investigate allegations against the real estate developer that
it failed to disclose a police complaint against an associate firm in
its share sale document in 2007. The allegations were from a complainant
who alleged that Sudipti Estates, which he said was an associate of
DLF, had duped him of about Rs 34 crore.
Power:
The
BSE Power index fell 2.78% to close at 2,108 levels in the week ended
21st October 2011. Crompton Greaves, BHEL, Tata Power, NTPC fell 14.0,
4.1%, 2.7% and 2.2% respectively. Crompton Greaves has announced its
financial results for the quarter and half year ended September 2011.
During 2QFY12, the company has reported 13% YoY rise in sales and 45%
YoY decline in net profits. The rise has come on the back of around 12%
YoY growth in power systems business and about 29% YoY rise in
industrial systems business.
However,
growth in the consumer products segment was muted at about 4% YoY.
Operating profits declined by 32% YoY during 2QFY12 as operating costs
grew by 20% YoY. Further, significant increase in interest cost and
depreciation charges during the quarter caused the bottomline to decline
by about 45% YoY. During 1HFY12, the company's sales increase by 9%
YoY, while net profits decline by 52% YoY
Oil & Gas:
The
BSE Oil & Gas index fell 2.37% to close at 8,650 levels in the week
ended 21st October 2011. Reliance Industries and ONGC fell 3.6% and
0.5% respectively. Reliance Industries (RIL) fell extending recent
losses triggered by weak Q2 operating performance. The core operating profit
margin (OPM) declined sharply to 12.5% in Q2 September 2011 from 16.3%
in Q2 September 2010. Media reports had suggested recently that RIL may
suspend oil and gas drilling operations for an unspecified time until an
internal valuation of its exploration and production strategy.
Outlook
High
volatility is expected on the bourses in a truncated trading week.
There are many variables for investors to grapple with, including
corporate earnings, a policy review from the Reserve Bank of India,
expiry of the near-month October 2011 futures & options contracts
and a European Union summit to finalize a package of comprehensive
measures to tackle the eurozone debt crisis.
The
near-month October 2011 derivatives contracts expire on, 25th October
2011. Furthermore with the rupee hitting a near 30-month low below the
50/$ level against the dollar, shares of exporters including IT firms
may edge higher while those of the importers may witness an adverse
impact.
With
inflation remaining at uncomfortably high level, the Reserve Bank of
India (RBI) is seen delivering another rate hike of 25 bps at its
half-yearly review of the monetary policy on Tuesday, 25th October 2011.
A
special muhurat trading session is scheduled on the bourses from 16:45
to 18:00 on Wednesday, 26th October 2011on account of Diwali. There is
no regular trading session on that day. The market also remains closed
on Thursday, 27 October 2011, on account of Diwali, the festival of
lights.
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