Several events hammered the markets this week. The Kashmir massacre, bad monsoon, lack of institutional support and the weakening US market saw the Sensex fall by 75 points (-2.3%) while the Nifty ended the week down 22 points (-2.1%).
FIIs after showing some buying enthusiasm soon turned sellers as the US markets crashed. As for domestic fund houses, they continued to be net sellers (sixth consecutive week), offloading Rs 61 crore worth of equities. To add to problems, the combined average turnover at both exchanges fell by 11% over the week to Rs 3,024 crore.
Barring a 30-point gain on Thursday, the Sensex hardly went up through the week. As has been the case for a while, Indian tech stocks continued to bleed thanks to trouble at the Wall Street. Hence, BSE IT Index was down 4%. What added salt to injury were less-than-expected results from Wipro. The IT major's net profits slipped 30% this quarter over the previous last quarter. While its share lost 3.2%, Infosys was down 4.7%. However, the worst of the lot was Hughes Software, which fell -11.8%, following a dip in its net profits (76%).
Profit booking saw old economy companies lose value this week. While Reliance Industries lost 3.1%, Telco lost 2.24%. PSU stocks also took a beating with further delay in HPCL and BPCL divestment. HPCL lost 0.7% whereas BPCL managed to gain 3.8%. That apart, bad monsoon impacted FMCG, auto and cement sectors. HLL was down 3.9% whereas ITC lost 3.3%. Despite registering a 5.1% growth in car sales and 25.5% increase in 2-wheeler sales in June, most auto stocks ended the week in the red -- Hero Honda (-6.3%), Bajaj Auto (-5.6%) and Mahindra & Mahindra (-6.5%). Among cement stocks, ACC was down 5% and Gujarat Ambuja lost 2.4% over the week.
The only sector that has managed to hold steady this week was the pharma sector. The BSE Healthcare Index ended the week up 0.7%. Pharma heavyweight, Ranbaxy Laboratories registered a 190% rise in net profits this quarter as against the corresponding quarter last year. Its share rose 1% over the week. The company also announced a 3:5 bonus. The other pharma major, Pfizer gained 6% as it agreed to buy rival Pharmacia Corp. for $60 billion in shares. This acquisition is likely to push Pfizer into the fourth place in terms of sales in the Rs 20,000-crore Indian pharma industry.
However, there is some good news for the steel sector. Acccording to the government, steel exports are likely to increase in the near term after a 14% slump in the first quarter (April-June) as domestic steel producers are scouting for new markets in Europe. But that didn't prevent the largest steel producer, Tisco, fall 5.1%. Steel stocks have rallied in the near past amidst increase in steel prices.
In the US, the stock market already affected by corporate scandals -- including a criminal probe of a plant owned by Johnson & Johnson -- felt more morose on account of disappointing tech forecasts. The Dow Jones crumbled 7.7% while Nasdaq shed 4% over the week.
The Sensex has lost all that it had gained this year. The corporate results are no longer driving the market. The biggest uncertainty is the monsoon. However, you could see a range-bound movement in stock prices. Watch out for banking and pharma stocks ahead of the big numbers coming out next week.