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Heavyweights Pull Markets Down

In spite of impressive corporate results and recovery in the IT index, stock markets posted a loss for the third consecutive week. The poor performance of index heavyweights was largely responsible for this.

Severe hammering of index heavyweights saw stock markets head southwards for third consecutive week. Over the week, the BSE Sensex—which hit a six-month low—lost 2 per cent and the Nifty shed 1.7 per cent. As for other indices, while the S&P CNX 500 was down 1 per cent, the S&P Mid-cap Index was up 1 per cent owing to a better performance by mid-cap stocks. In the US, the Nasdaq was up 0.6 per cent, but the Dow Jones lost 0.4 per cent over the week.

Among sectoral indices, only the BSE IT Index posted gains—up 1.8 per cent. Corporate results remained the key focus as more companies announced their results. Hexaware Technologies saw its revenues rise by 31 per cent over the same period last year. The company had posted a loss of Rs 9 crore in Q-1 last year, this year though Hexaware made a profit of Rs 1.75 crore. The scrip gained 3.2 per cent over the week. Geometric Software too recorded a 27 per cent rise in its net profits over the corresponding quarter last year. The scrip was up 0.7 per cent. Another IT company, HCL Infosystems, registered a three-fold rise in net profits over the same period last fiscal. An impressive performance this year saw the stock gain a massive 25 per cent.

Software major, Satyam, on the other hand, posted a loss of Rs 35 crore this quarter. However, this was due to the company's decision to write-off 'extraordinary item' of Rs 151 crore on investments in subsidiary companies and other IT ventures. Eliciting positive response from the market, the stock gained 13.7 per cent over the week. Heavy trading volumes were witnessed on the day of the result. Infosys, however, lost 1.7 per cent over the week.

Among non-IT companies, index heavyweight Reliance announced its Q-4 results this week. The company's net profits grew by 41 per cent to touch Rs 1,101 crore vis-a-vis profits of Rs 780 crore in Q-4 last year. Also, Reliance saw a rise of 32 per cent in its revenue for the same period. The company has proposed a dividend of 50 per cent. Despite this, the scrip lost 3.5 per cent over the week.

As for PSUs, heavyweight ONGC remained flat while HPCL and BPLC lost 8 per cent and 1.5 per cent, respectively. Overall, the BSE PSU Index lost 1.2 per cent. The BSE FMCG Index lost 2.7 per cent with FMCG major Hindustan Lever touching new lows. The stock lost 3.8 per cent over the week. The BSE Healthcare Index too posted negative returns of 0.3 per cent.

Among institutional investors, FIIs bought equities worth Rs 233 crore this week. Mutual funds, on the other hand, continued to remain sellers for the fifth consecutive week. They had sold equities worth Rs 26 crore till Thursday.

Meanwhile, the Bombay Stock Exchange has decided to suspend trading in securities of 35 companies for having failed to adhere to the norms set by the exchange. Since some of these companies have not submitted their quarterly results for a while now, the exchange decided to take some action.

Outlook

Stock markets are likely to get direction from more Q-4 results next week.