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Krishnan Thiagarajan

THE BSE Sensex touched a new 52-week low, closing below the 2900-mark this week. The bearishness which engulfed the stock markets was attributable mainly to selling pressure in heavyweights, with FII's remaining net sellers through the week and even domestic institutional investors.

The Sensex closed at 2875.53 points, 134.23 points (or 4.45 per cent) lower at the end of the week. As the earnings season gathered momentum, the earnings numbers from some of the heavyweights this week turned out to be a mixed one. While the earnings performance of Hindustan Lever, Mahanagar Telephone Nigam, Hindalco Industries and Videsh Sanchar Nigam were disappointing, the likes of ITC, Grasim Industries and Indian Rayon turned out to be fairly strong and encouraging.

As the overall macro-economic environment remained sluggish and there was no discernible direction in the disinvestment exercise, the markets appear to shrugged the positives and remained focussed on negatives. For Hindustan Lever, while the post tax earnings appeared to be in line with market expectations, the revenue growth fell short of expectations. In the case of MTNL, the drop in the national long distance tariffs and higher tax incidence led to the post tax earnings declining by 35.4 per cent to Rs 246.90 crore alongwith a decline in total income. VSNL, part of the Tata group, also registered a 33 per cent decline in post tax earnings as declining customer tariffs, lower settlement rates from international carriers and competition from other international long distance took a toll on its earnings.

The performance of the software service companies turned out to be a mixed one. The earnings performance of HCL Technologies, CMC and Mascot Systems were disappointing. While Satyam Computers recorded a decent sequential performance for the second quarter, a downward revision in its earnings guidance by 6-7 per cent contributed to sluggishness in the stockprice.

An unimpressive performance from HCL Technologies contributed to the stock suffering a massive hammering at the bourses. The stock declined by 25 per cent during the week. Indications by the company may record lower growth in its revenues and profits for the next two quarters on account of client rationalisation efforts further aggravated the negative sentiment in the stock.

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