Share market weekly wrap: Sensex, Nifty fall over 2% to 7-month lows; Q2 earnings, global cues to guide ahead

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Published: October 27, 2018 11:30:22 AM

Sensex and Nifty posted their second consecutive weekly loss, falling nearly 2.8% during the week to their lowest levels in over seven months. Both the benchmark domestic market indices have fallen over 8% in October, wiping off nearly all gains of 2018.

Some more set of earnings, along with macro-data and global market movements will chart the course of the headline indices in the upcoming week, said experts.

Sensex and Nifty posted their second consecutive weekly loss, falling nearly 2.8% during the week to their lowest levels in over seven months. Both the benchmark domestic market indices have fallen over 8% in October, wiping off nearly all gains of 2018. On the last trading day of the week, the market entered the November derivatives series on a weak note, with the Sensex plunging over 400 points from its Friday’s high while the Nifty managed to hold on to the 10,000 mark.

A sharp sell-off across global equity markets, coupled with fresh weakness in the rupee against the dollar and a mixed bag of quarterly corporate earnings, contributed to the decline in the headline indices. Unabated capital outflows and derivatives expiry, too, kept investor sentiment on tenterhooks. Despite easing crude prices, the rupee posted its first weekly loss against the US dollar in three weeks, closing at 73.46 against the greenback on Friday.

“This week we saw one of the lowest points after 23 March this year. Major factors were disappointing results and muted growth outlook from automobile companies,” Pritam Deuskar, Fund Manager, Bonanza Portfolio, told FE Online. “Despite crude oil correction, markets could not sustain. Also few of the banks performed weak after rising of provisions and erosion of profits in results,” he added.

During the week, private sector lender Yes Bank reported a 4% dip in its net profit for the second quarter ended September 2018 to Rs 964.7 crore, as asset quality dropped and provisions rose a little over 50% from the previous quarter. Following the results, Yes Bank share price plummeted 15% to a nearly one-month low before a sharp recovery later. Among other major results, Bharti Airtel posted better-than-expected earnings, while ITC posted a 12% rise in its quarterly net profit led by double-digit growth in its cigarette, hotels and agri businesses.

“Earnings season weighed further as higher provisions by Yes bank took a toll on share price and saw a sharp cut of 8% while ITC with a decent set of numbers was hammered down. Expectations from ICICI bank was another flavor for the street while post Yes bank numbers and negative sentiments kept range in check for the stock,” said Mustafa Nadeem, CEO, Epic Research.

What to expect next week

Some more set of earnings, along with macro-data and global market movements will chart the course of the headline indices in the upcoming week, said experts. According to Vinod Nair, Head of Research, Geojit Financial Services, the market, which has been correcting since the last two months, is bound to see some relief as it is deeply below the 200 days moving average (DMA) and well below the oversold region.

“Earnings season will get pace in the coming weeks and as market participants will be keen on comparing consensus earnings with actual which will dictate the market momentum. And if the global volatility continues investors will be more focused on haven assets like gold and bonds,” said Nair.

Nadeem underlined macro-data and the impact of country’s largest private sector lender ICICI Bank’s Q2 performance as the key factors to steer the market next week. Data released after market hours on Friday showed that ICICI Bank’s quarterly net profit fell sharply by over 50% in July-September, even though the asset quality showed improvement. ICICI Bank posted a quarter of profit as compared to a loss of Rs 120 crore reported in the first quarter of the year.

“Manufacturing PMI and infrastructure output numbers are ahead and will be seen crucially while the leads will also be taken from ICICI bank’s result. Mostly the trend will be in tandem with the global markets and indices such as SP500,” said Nadeem. On Friday, the US market extended losses with the Dow Jones plunging over 400 points.

Key takeaways this week

Weekly losses: The Sensex slumped 966 points or 2.81% to close the week at 33,349.31 points. The Nifty 50 of the National Stock Exchange fell 274 points or 2.7% to end at 10,030 points week-on-week.

Top weekly Sensex gainers: Bharti Airtel (4.24%), HDFC (2.63%), Coal India (1.83%) and ICICI Bank (0.05%).

Top weekly Sensex losers: Yes Bank (-17.06%), Sun Pharma (-9%), IndusInd Bank (-8.33%), Infosys (-7.19%) and TCS (-6.13%).

FII/DII activity: Provisional data from the stock exchanges showed that foreign institutional investors sold stocks worth Rs 5,751.17 crore during the week ended October 26. Domestic institutional investors, on the other hand, purchased stocks worth Rs 4,508.62 crore.

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