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Earnings season off to a 'poor' start, investors rush to book profit

By ET Bureau | 22 Jul, 2015, 03.11AM IST

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MUMBAI: Indian stocks ended weak after a late sell off on Tuesday as disappointing earnings by some large companies prompted traders to cut their bullish bets built in the last few trading sessions.

Profit warnings by Sun Pharma, higher bad loans for HDFC Bank and lower-than-estimated earnings by Hindustan Unilver overpowered the optimism surrounding the strong Infosys results.The selloff in mid-and smallcap shares was more severe than that in bluechips. TheBSE Sensex ended 238 points, or 0.84%, lower at 28,182, falling as much as 380 points from the day's high. The Nifty lost 74 points, or 0.86%, to close at 8,529.45.

"Some of the results and guidances like Sun Pharma and HUL have disappointed the street and hence there was profit booking," said Akshay Gupta, CEO & managing director, Indiabulls Mutual Fund. The Sensex and the Nifty have gained 8% from their lows onJune 12. On Tuesday, BSE's midcap index shed 1.42% while the smallcap index dropped 1.59%. Across categories on the BSE, 1,915 stocks declined while 910 witnessed gains.

IT major Infosys, which gained over 11% on better-than-expected results, pipped ITC and ONGC to become the fifth most valued firm in terms of market capitalisation. OntheBSE,82 stocks including Tata Steel, Vedanta, SAIL, Adani Enterprises, ONGC, Nalco, Cairn, Uco Bank and Nalco hit their year lows on Tuesday. Foreign institutional investors (FIIs) net sold shares worth .`227 crore on Tuesday, according to provisional data. These investors have pumped almost .`4,000 crore in the last six trading sessions.

Brokers said investors are nervously watching the developments in the Parliament.Technical analysts expect markets to remain weak in the near-term as the Nifty is close to a strong hurdle point. Hiren Shah, technical analyst at Edelweiss, said, "Nifty hasmoved higher in the last one week but is facing some resistance near the 8650-8700 levels. The current Nifty structure is indicating that 8450-8500 levels would be a very important support for the current expiry".

"We believe markets would continue to remain weak for the upcoming trading sessions and remain between 8100 and 8400 in the near term,"said Achin Goel,head,wealth management,Bonanza Portfolio.