The News International Team
The 50-share NSE Nifty failed to hold the 8000 level (touched on September 1 for the first time) on Thursday, the day when the September series expired. Deferment of gas pricing decision to November 15 and de-allocation of coal blocks forced investors to take out some profits off the table.
The government’s decision to defer gas price hike is a bigger negative than coal block de-allocation ruling, said Arvind Sanger of Geosphere Capital.
Not only the day was bad, but also the F&O series that closed lower for the first time in last eight series. The index fell 0.5 percent in September series as against a 31 percent rally in last seven series.
The index today plunged 90.55 points or 1.13 percent to close at 7911.85 after hitting a day’s low of 7877.35 while the 30-share BSE Sensex declined 276.33 points or 1.03 percent to 26468.36 after seeing an intraday low of 26349.55 (down 395 points). Total market turnover was Rs 8.5 lakh crore, the highest ever while NSE F&O segment clocked turnover of Rs 5.3 lakh crore today.
The broader markets too saw huge selling pressure with the BSE Midcap and Smallcap indices falling 2-3 percent. For the series, these indices outperformed benchmarks, up 0.6 percent and 1.8 percent, respectively while in last seven series, both gained 50 percent and 66 percent, respectively.
After weak September series closing, Hemant Thukral of Aditya Birla money believes the October series will be positive as the sentiment is strong.
“The Nifty rolls have happened on a higher cost which still tells that the underlying sentiment remains positive for the market. 8000 Put continues to have the highest open interest even in the next series. So I have a feeling we may have a first rally in first five-seven days which can again take Nifty back to 8150-8200 levels,” he elaborated.
All sectoral indices (except IT and pharma – so called defensives) saw selling pressure. The BSE Realty, Oil & Gas, Metal, Power, Bank and Capital Goods indices were down 2-3 percent while BSE IT index jumped over a percent.
Metals and power stocks crashed again after Supreme Court verdict that cancelled all coal blocks allotted since 1993.
Jindal Steel and Power was the main culprit of this verdict, down nearly 8 percent, in addition to 10 percent gains in previous session as Credit Suisse downgraded the stock to underperform and cut target price to Rs 158 from Rs 254 after Supreme Court verdict that cancelled all coal blocks allotted since 1993.
Aluminium major Hindalco Industries was down over 4 percent. Edelweiss maintains buy on the stock but cut target price to Rs 223 from Rs 240. The brokerage cut FY16e EBITDA by 2 percent.
Tata Steel and Sesa Sterlite fell nearly 3 percent followed by Tata Power with 2 percent loss. In the broader space, Prakash Industries, Usha Martin and Jayaswal Neco Industries tanked 18-20 percent.
Banks stocks too lost ground as they have exposure to some mining projects. ICICI Bank, PNB, State Bank of India and Axis Bank were down 3-6 percent. PSU banks saw big sell-off with the NSE PSU Bank index falling 5 percent.
CVR Rajendran, CMD, Andhra Bank (stock fell 12 percent), says the bank has exposure worth Rs 4,346 crore to 14 companies impacted by the SC ruling.
Another news that knocked banks shares was that deal between Reliance Power (down 7.4 percent) and Jaiprakash Power Ventures (down 14 percent) was called off. Jaiprakash Associates crashed 19 percent and Jaypee Infratech was down 13 percent. According to Nomura, SBI has 6,400 crore exposure to Jaypee Group debt while IDBI Bank (down 11 percent) and ICICI Bank have Rs 7,900 crore and Rs 12,800 crore.
Shares of ONGC, Reliance Industries and BHEL were other prominent losers, down 3-4 percent. However, TCS, Infosys, Dr Reddy’s Labs, Gail India and Cipla bucked the trend, up 1-2.5 percent.
Declining shares outnumbered advancing ones on the Bombay Stock Exchange by a ratio of 2274 to 696.