Markets end week on flattish note - Eastern Financiers

Markets ended the week on a flattish note, marking third consecutive week of losses as disappointing corporate earnings, dismal IIP number and a widening current account deficit dampened investor sentiments. Inflation figures also didn't have much to cheer. Nifty closed at 5887.40, down 16.10 points or 0.27 percent and Sensex shut shop at 19460.15, down 16.62 points or 0.09 percent. Sectoral indices were also mixed in nature with more losers than gainers.

Corporate performance continued to disappoint on an overall basis. The core revenues of 1,944 companies that have declared their results so far expanded just 5.3 per cent on a year-on-year basis. Corporate profitability was not great, either. Net profit (excluding extraordinary gains and losses) was almost flat, growing 1.9 per cent year-on-year. Some of the big names like ONGC, Tata Power, BPCL, etc. surprised on the negative side.

The IIP data for the month of January, which came during the week, was yet again a disappointment for the markets as it contracted 0.6 percent, marking second consecutive month of declining industrial output. The declining industrial growth is the clear testimony of the fact that steep interest rates, persistently high inflation and the government's efforts to cut down on expenditure has significantly affected industrial activities. This sustained poor performance of IIP has led to further expectations of a reduction in key policy rates by Reserve Bank of India.

Markets also had little to cheer from the January Foreign trade data. Despite putting curbs on imports to reign in the mounting Current account deficit, the figure ballooned to $20billion in January, its second highest monthly surge. Surge in imports negated the marginal increase in exports, which have been shrinking for the last eight months. The high current account deficit is unsustainable as it can't be funded for a long time with capital flows and will get adjusted through a depreciation of the exchange rate Another set of important macro data that the markets reacted to were the inflation figures for the month of January. While the prices at the wholesale level declined to its lowest level in two years, retail inflation still persisted at the doubledigit level.

Source : Equity Bulls

Keywords