The News International Team
Equity benchmarks resumed downtrend again on Thursday on global growth concerns after consistent fall in crude oil prices. The 50-share NSE Nifty closed below the 8300-mark weighed down by oil & gas, technology and select banks stocks.
The index declined 62.75 points to 8292.90 and the 30-share BSE Sensex shed 229.09 points to 27602.01 amid volatility. The broader markets saw selling pressure too; the BSE Midcap and Smallcap indices were down over 0.6 percent.
Investors don’t need to worry about the current correction, say experts. They feel the market, after this correction gets settled, may see fresh record high soon.
Dhiraj Agarwal, Director – Institutional Sales, Standard Chartered Securities says the market is unlikely to correct more than 5-6 percent by December-end. He, however, expects Nifty to gain about 30-40 percent in the next 24 months.
Globally, Asian markets spooked today on the back of weakness in US, worse than expected Japanese machinery data and decline in oil prices. Shanghai, Nikkei and Hang Seng were down 0.5-0.9 percent.
After market hours, People’s Bank of China (PBOC) said it is set to inject 400 billion yuan into Chinese banking system. European markets were mixed at the time of closing of Indian equities.
Brent crude oil prices edged up by 49 cents to USD 64.73 a barrel (at 16 hours IST). The OPEC cut its 2015 world oil demand growth forecast by 70,000 barrels per day (bpd) to 1.12 million bpd, the lowest in a decade.
Back home, the Indian rupee hit a 9-month low of 62.32 a dollar, down 30 paise (at 16 hours IST) on account of sustained dollar demand from importers and a fall in equities.
Oil & gas stocks ONGC and Reliance Industries fell 3 percent each followed by Cairn with over 2 percent loss. GAIL slipped 3 percent too, after CLSA reiterated sell rating on the stock with a cautious outlook that there is more downside likely. The brokerage has also slashed its target price to Rs 425 per share and lowered earnings per share (EPS) due to cut in Brent crude price.
Tata Motors shed 1.4 percent after its UK subsidiary Jaguar Land Rover reported a 2 percent decline in sales in November.
Shares of Infosys, ICICI Bank, HDFC, Bharti Airtel, Tata Steel, Hero Motocorp, Tata Power and Wipro were down 1-3 percent. However, ITC, HDFC Bank, Maruti Suzuki, Coal India, Axis Bank, Hindalco Industries and Sun Pharma gained 0.3-1 percent.
Dr Reddy’s Labs advanced 0.9 percent after Nomura lifted target price on the stock to Rs 3,793 and maintained buy rating, citing upside potential in US sales.
In the broader space, sugar companies such as Balrampur Chini, Bajaj Hindusthan, Sakthi Sugars, Shree Renuka Sugars and Dhampur Sugar gained 4-6 percent, reacting to the new ethanol blending policy approved by the CCEA on Wednesday. The range for ethanol prices was fixed between Rs 48.5 to Rs 49.5 per litre which was higher than prices stated by the food ministry of around Rs 42 per litre. ISMA told CNBC-TV18 that the sugar industry will see better realizations with the new price.
Havells India plunged 9 percent after brokerage UBS downgraded the stock to sell from neutral with a target of Rs 295, citing rich valuations and elusive growth recovery.
Anil Rai Gupta, joint managing director of Havells said the overall sales have tapered off for all segments. He expects to end FY15 with 13-13.5 percent margins.
About 1140 shares advanced while 1756 shares declined on the Bombay Stock Exchange.