Markets post worst weekly fall since end Oct

Markets post worst weekly fall since end Oct

Mumbai: Indian shares posted their worst weekly performance since end of October, after they shed 1% on Friday, led by losses in energy major Reliance Industries and top private lender ICICI Bank.

Reliance Industries extended losses and fell 2.3% percent to Rs1,010.45, its lowest close in around one-and-a-half months, as investors await clarity over its proposed bid to buy bankrupt petrochemicals firm LyondellBasell.

Meanwhile, the expectations of a quick action by central bank to tame inflation heightened after sources said Reserve Bank of India Governor Duvvuri Subbarao will meet Finance Minister Pranab Mukherjee on Friday evening.

ICICI Bank dropped 2% while rivals State Bank of India and HDFC Bank declined nearly 1% and 0.5% respectively.

“Markets are, to an extent factoring a CRR (cash reserve ratio) and a reverse repo rate hike. They are ignoring the likely credit offtake growth in 2010," said Manish Sonthalia, fund manager of portfolio management services at local brokerage Motilal Oswal.

“If IIP (index of industrial production) is strong, bank credit is bound to pick up. Sooner or later, the banking stocks should catch up," he said adding that he was buying SBI, ICICI and HDFC Bank for his clients.

The 30-share BSE Index closed 1.03% or 174.42 points lower at 16,719.83 points, its lowest close since 27 November. It shed 2.3% this week, registering its first weekly loss in three weeks. Only six of its components closed in the green.

The 50-share NSE index closed down 1.1% at 4,987.90.

“There is no buying conviction. Every rise is a selling opportunity now. The market has run out of steam completely," said Arun Kejriwal, director of research firm KRIS.

The Sensex has rallied more than 73% in 2009, helped by robust foreign fund inflows.

India’s BSE stock index is likely to extend the rally into 2010, underpinned by strong economic growth and an improving earnings outlook, but it is unlikely to repeat 2009’s spectacular rise, market participants say.

The benchmark Sensex is likely to rise to 18,375 points by mid-2010 and 19,000 by the end of 2010, a Reuters poll showed.

Profit taking hit IT major Infosys Technologies, which declined 1.4% to 2,526.50 rupees, as traders booked profits after the stock’s recent sharp gains. It still closed 2.9% higher this week.

Leading vehicles maker Tata Motors climbed 3.2% to Rs732.75, after its global sales in November rose 62% from a year earlier to 75,775 units, with sales at its Jaguar Land Rover (JLR) unit up 30%.

“The sales numbers reinforce our positive view on the stock," Macquarie said in a note.

An improving global environment and cost reduction initiatives should result in a sharp turnaround at JLR, JP Morgan said in a note.

“We expect the domestic business - particularly the CV (commercial vehicle) segment - to sustain its growth momentum given a pick-up in the investment cycle," the note added.

In the broader market, losers outpaced gainers in a ratio of 1.4:1 in a low volume of 336 million shares.