A rally of as much as 1% on the back of Barack Obama?s re-election as US president was not enough to prevent Indian equities from ending the week with a marginal decline.
Indian benchmark indices, which touched one-month highs on Wednesday, started giving up the gains on Thursday and deepened the correction on Friday after the September quarter numbers of heavyweights, such as ONGC, SBI and Tata Steel, disappointed the Street.
The 30-share Sensex lost 0.86%, or 162.58 points, while the broader Nifty gave away 0.9%, or 52.5 points, to close the week at 18,683.68 and 5,686.25, respectively.
During the week, both indices shed 0.2%. Market experts believe that after tracking the US presidential election results, the traders have shifted their focus to domestic issues, in turn, capping the market gains.
?Wednesday?s rally was in conjunction with the gains made by other Asian markets. However, US markets have declined after Obama?s re-election as global investors are now studying the likely outcomes of the US fiscal cliff,? said an analyst.
According to UBS global equity strategist Christopher Ferraron, equity markets may not be able to make strong gains unless investors see a solution to the US fiscal cliff that is scheduled on January 1, 2013. ?If no solution is negotiated or the deadline is not postponed, the risk aversion may escalate, which could affect the Asian equities negatively,? he said.
After opening flat, the benchmark indices begun their descent in early trading hours as stocks like ONGC and SBI started to weigh it down. ONGC’s September quarter profit dipped 32% compared to the last year, the highest decline in about four years.
Though SBI’s September quarter net earnings jumped 30%, beating expectations, a more-than-expected increase in its bad loans weighed on the stock. For the quarter, gross NPAs advanced to 5.15% compared to 4.2% last year. ONGC slid 3% to R257.10, while SBI declined 3.9% to R2156.35 on the BSE.
Tata Steel was another heavyweight which affected the benchmark performance on Friday. The stock plunged more than 3% to R390.55 after the steel marker reported a consolidated net loss of R364 crore for the quarter.
?After the RBI stood its ground on interest rates in the previous week, the market focus was back on September earnings,? said a trader. According to him, since the market is now pricing no-interest-rate-cut till January, any disappointments in the September quarter earnings are likely to keep the benchmark indices in check.
Foreign institutional investors (FIIs) sold about $37 million worth of shares, according to provisional data on exchanges. During the week, they bought $275 million worth of Indian stocks, taking their year-to-date purchases to $18.6 billion.
The market breadth remained negative with 26 of the 30 Sensex companies seeing declines on Friday?s trade.
Marketwide, 473 advances were observed against 1,447 declines, according to the BSE. Market activity remained healthy as the cash market turnover on Friday stood at R13,365 crore, while the turnover in the derivatives segment was R1.58 lakh crore. India VIX, the gauge of market volatility, declined 1% to 14.37.
