Weekly: Sensex fall over 900 points; global cues, weak economic data weigh

Benchmark indices posted their steepest weekly fall of the year on concerns over an earlier-than-expected rate hike by the US Federal Reserve and mixed economic data that showed a decline in industrial production for second straight month in January and retail inflation peaking to a four-month high in February.

“It was a disappointing week for equity markets as benchmarks slipped over 3 percent and slipped below their major support zone. Global concern mainly weighed on the sentiments of the domestic markets, after good economic reports from the US intensified speculation that Fed will go for an earlier than expected rate hike. Besides, participants even overlooked some positive domestic data and upheld the negative bias,” said Jayant Manglik, President (retail distribution), Religare Securities Limited.
In the week to February 20, the 30-share Sensex fell 946 points or 3.21% at 28,503 and the 50-share Nifty ended down 290 points or 3.24% at 8,648. In the broader market, the BSE Mid-cap Index declined 2.26 per cent, while the Small-cap Index fell 2.15%, outperforming the benchmark indices.
Strong US jobs reports led to a weak start for the markets as investors turned nervous over an earlier-than-expected hike in key rates by US Federal Reserve.
On the domestic front, India’s current account deficit (CAD) at $ 8.2 billion in the third quarter of current fiscal quarter was lower than the figure of $ 10.2 billion the previous quarter, the Reserve Bank of India said in a statement on Tuesday. However, compared to the same quarter last fiscal  CAD rose sharply from $ 4.2 billion. India’s trade deficit widened to $ 39.2 billion during the third quarter of current fiscal from $ 38.6 billion in the previous quarter as exports fell 7.3% while imports declined 4.5%. 
The uptick in retail inflation at 5.37% in February from 5.11% in January also curbed risk appetite by dimming the possibility of further rate cuts by Reserve Bank of India. The fall in January industrial production at 2.6 per cent from 3.2 per cent in December raised concerns over the extent and durability of India’s economic growth.
However, the IMF’s latest report that raised India’s economic growth forecasts to 7.2% in the current fiscal year, compared to 5.6% as predicted earlier came as a boost in the arm along with the passage of insurance bill in Parliament which brought some gains to the markets. On Tuesday, Lok Sabha cleared the contentious land acquisition Bill, along with nine amendments proposed by the government.
Meanwhile, foreign investors were net buyers in equities to the tune of Rs  673.41 crore during the week, as per provisional stock exchange data.
Buzzing Stocks
Among the sectoral indices, all of which ended in red, BSE Bankex and BSE Capital Goods indices down nearly 5% each emerged as the top losers followed by BSE Oil & Gas and Metal which lost 3.6% and 3.3% each. BSE Power and Realty indices also lost over 3% each while BSE Healthcare and IT indices declined around 2.7% and 2.4% each.
Bharti Airtel gained over 15% over the week and was the top gainer. Sunil Mittal, chairman and Group CEO of Bharti Enterprises, has said that its foreign partner, AXA will increase its equity investment to 49% in the joint venture which offers life and general insurance.
Among bank stocks, ICICI Bank fell 5.03%. Responding to media reports about a five per cent stake sale in in insurance unit-ICICI Prudential for around $ 300 mn by March end, the bank said that no material development requiring any reporting under clause 36 of the listing agreement has taken place.
Axis Bank fell 7.54%. The bank has raised $ 250 million under the Euro 3 billion Medium Term Note Programme through its DIFC branch.
From the IT pack, TCS fell 4.27%. In a presentation to analysts, the IT major said that it expects its revenue in the fourth quarter of the current fiscal to be in-line with last year trend with a likely currency impact of negative 275 basis points (bps) to constant currency revenue in rupee terms and negative impact of 200 bps to constant revenue in dollar terms in the fourth quarter.
Infosys dropped 1.56%. According to media reports, the company will delay the release of its fourth quarter results to provide more time to come up with a future oriented strategy to reclaim its market leader position.
L&T declined over 7%. Its Metallurgical and Material Handling division has secured orders worth Rs 1242 crore across various business segments in the fourth quarter of the current fiscal, so far.
Among index heavyweights, ITC fell nearly 2%. The compay is likely to increase prices of cigarettes by 15% following the hike in exicse duty in the Union Budget 2015-16 .
Week Ahead
Traders will keenly watch the release of wholesale price inflation data, rupee movement against dollar, investment by foreign portfolio investors, US FOMC Meet announcement and US Jobless Claims along with broad global trends and developments in the on-going budget session of Parliament in the coming week.