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Capital Markets

India shares halt weekly winning streak as Reliance Industries, HCL Tech fall

Mixed earnings damp investor enthusiasm

MUMBAI (NewsRise) -- Indian shares ended a weekly winning run that began end-March amid a set of mixed quarterly earnings from blue chips.

The BSE Sensex posted a weekly fall of 0.2% following Friday's 0.5% decline to 34,915.38. The Nifty 50 Index dropped 0.6% to 10,618.25 on Friday, chalking weekly losses of 0.7% in the process. The day's losses on both the indexes came following an overnight decline on the S&P 500 Index and before the release of the closely watched U.S. jobs data.

Reliance Industries, down 4.1% this week, was the biggest contributor to the losses on the benchmark indexes. The conglomerate's March quarter net-profit increase of 17% fell short of analyst expectations in a Bloomberg poll. HCL Technologies was the worst performer in percentage terms, falling 10.7% this week on the back of a tepid organic revenue outlook for this year.

On the winning side this week were Kotak Mahindra Bank and Housing Development Finance Corp., up by 2.9% or more. The former reported a robust 15% rise in March quarter net profit, while the latter announced a better-than-expected 39% net profit jump for the period.

On Friday, Reliance Industries dropped 0.9%, HCL rose 0.5%, Kotak Mahindra Bank shed 0.2%, and HDFC fell 0.9%.

Losses in Indian markets this week came amid tepid U.S. cues. Through Thursday, the S&P 500 Index was on course for its worst weekly performance in seven weeks as the U.S. Federal Reserve sounded more confident of achieving its inflation target. Trade negotiations between U.S. and China also damped investor enthusiasm. Most regional indexes posted weekly declines with South Korea, Singapore, and Malaysia falling by 0.9% or more.

Vinod Nair, the head of research at Geojit Financial Services, said that "any escalation of trade war will dampen investor sentiment," and global markets were looking quite weak. For India, the on-going earnings and upcoming election in India's southern state of Karnataka will provide near-term direction, he added.

Outcome of the Karnataka state polls, due on May 15, is being closely watched to assess the prospects of Prime Minister's Narendra Modi's re-election in national elections, which need to be called before the middle of next year.

Among movers on Friday, Vedanta dropped 1.6%. Shares of the miner had earlier risen by 1.5% after reporting a more than 80% jump in March quarter net profit. Hero MotoCorp edged higher by 0.1% following a 16.5% on-year increase in April sales volume.

Bharti Airtel dropped 1.9%. S&P Global Ratings downgraded the telecom company to 'negative,' citing weak financial performance in the previous fiscal year and elevated capital expenditure in current year.

Hexaware Technologies plunged 14.2% to 387.40 rupees. While the company's reported a 18% increase in net profit for the January to March period, analysts pointed to its valuations for the selloff.

Motilal Oswal Securities downgraded the stock to 'sell' with a target price of 390 rupees, saying that while the firm showed continued traction in the March quarter, it was not enough to justify valuations.

JSW Energy dropped 7.7% after the company posted a loss for the March quarter. L&T Finance Holdings added 2.7% after a 30% increase in net profit in the same period. Castrol India tumbled 5.4% after the petroleum product maker announced a meagre 1% increase in net profit. Bank of Maharashtra jumped 8.1% after March quarterly loss narrowed year-on-year.

--Nimesh Vora

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