Markets this week: Sensex loses 2.7 percent, SBI falls 7.5 percent

November 8, 2013

Hurt by profit-taking in blue chips, the BSE Sensex posted its worst weekly decline since August as it lost 2.7 percent in a holiday-truncated week.

On Thursday, shares were hurt after ratings agency Standard & Poor’s said it will review the rating of Asia’s third-largest economy after the new government lays out its policy agenda next year. The agency’s outlook on rating remains negative.

However, Goldman upgraded its view on India to “marketweight”, with a Nifty target of 6,900 points. The investment bank noted optimism over political change is trumping economic concerns.

Here are the top Sensex losers and gainers of the week:

LOSERS

STATE BANK OF INDIA: After posting a near double-digit return last week, SBI was the worst Sensex performer in the week ending Nov. 8. The stock lost 7.5 percent ahead of earnings announcement on Nov. 13.

SBI, which accounts for about a quarter of all loans and deposits in India, revised its base rate by 20 basis points to 10 percent on Wednesday.

After last year’s rally of over 45 percent, the stock is down 26.8 percent in 2013. The outlook for the shares is mixed: of the 51 analysts covering the stock, 21 have a buy or an equivalent rating, while 20 recommend a sell, according to Thomson Reuters data.

ICICI BANK: The stock lost some ground this week, losing 7.2 percent, but the shares are still up more than 18 percent since October. Last month, the Chanda Kochhar–led bank reported better-than expected results, driven by car and home loans.

However, analysts are concerned about the bank’s asset quality going ahead. “Higher-than-expected asset quality stress on its loan book would be the key risk,” Daiwa Capital Markets said in a research report on Oct. 25, maintaining a ‘buy’ on the stock with a target price of 1,195 rupees.

BHEL: On Wednesday, the country’s largest power equipment maker reported a worse-than-expected 64 percent drop in its September-quarter profit as a slowdown in demand weighed. The company’s shares lost 6.4 percent during the week.

“We retain our cautious stance and sell rating as valuations do not provide comfort with potential earnings decline on the back of inadequate backlog, slower execution and margin pressures,” Kotak Institutional Equities said in a research report on Nov. 7.

BHARTI AIRTEL: Shares of India’s leading telecom operator lost 5.8 percent, a week after the company reported a 29 percent fall in its September quarter profit. Hurt by foreign exchange losses, Bharti posted its 15th consecutive quarter of declining profits on Oct. 30.

In a research report released on Thursday, HDFC Securities said: “competition coupled with cancellation of licenses last year will improve Bharti’s prospects of gaining new customers.”

Data showed that of the 45 analysts covering the stock, 37 have a buy or an equivalent rating.

HDFC: After rising 11 percent in October, HDFC has started the new month on a weak note.  Shares of the mortgage lender lost 5 percent this week.

HDFC reported a 10 percent rise in net profit for the July-September quarter on Oct. 21 and the lender is betting on increased demand in smaller cities to boost growth. Of the 43 analysts covering the stock, 25 have a ‘buy’ or equivalent rating, data showed.

GAINERS: Tata Steel was the best performer, gaining nearly 5 percent (the company reports its results on Nov. 13). NTPC rose 4 percent, followed by Infosys with gains of 2.4 percent. Drugmaker Cipla gained 1.2 percent higher while Hindalco edged 0.4 percent higher.

(Editing by Aditya Kalra; follow Ankush on Twitter at @Ankush_patrakar and Aditya @adityayk. This article is website-exclusive and cannot be reproduced in any form without permission)

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