TheNewsInternational TeamIt was a rude shock for the market on Thursday after the relief rally on Dalal Street in previous session (Previous day’s rally was after seven consecutive sessions of losses earlier). Benchmark indices plunged to 8-months lows with the Nifty closing below the 8000-mark as selling pressure intensified in banking & financials, oil and auto stocks.
The 30-share BSE Sensex tanked 469.52 points or 1.75 percent to 26370.98, the lowest closing level since October 2014. The 50-share NSE fell 159.10 points or 1.96 percent to end at 7965.35 after hitting an intraday low of 7958.25.
With this fall, the Nifty plunged 12.7 percent and Sensex lost 12.2 percent from record highs of 9119.20 and 30024.74 (touched on March 4), respectively.
Delay in monsoon, build up of fresh shorts after breaking 8000 level on the Nifty and likely FIIs selling in heavyweights could be the reasons behind today’s fall, feel experts.
Dhiraj Agarwal, Independent Market Expert said the market is not out of woods yet, although a few data points have turned positive. The risk of monsoon is something one should take cognizance of, Agarwal warns.
Gautam Chhaochharia, head of India research at UBS Securities said he has lowered its year-end Nifty target to 8600 from 9600. According to him, deflation is hurting corporate earnings.
Despite this, Chhaochharia said interest for India remains high among investors (foreign), almost at the same level as last year this time.
The broader markets, too, caught in bear grip. The BSE Midcap and Smallcap indices were down 1.8 percent and 1.55 percent, respectively. About 784 shares advanced against 1862 shares declined on the Bombay Stock Exchange.
The rupee (during late trade of equity markets) started falling, which indicated that foreign investors may be sellers in heavyweights. The currency was down 13 paise to 63.97 a dollar.
Meanwhile, cyclone in the Arabian sea delayed the onset of the south-west monsoon. MET department said rains will arrive in Mumbai by June 15 but also added that El-Nino continued to gather strength.
All sectoral indices ended in the red today. Reliance Industries and HDFC were the biggest contributors to the Sensex fall, down 3.2 percent and 2 percent, respectively.
Tata Power was the biggest loser on Sensex, down 4.9 percent followed by Tata Motors with 3.6 percent loss. CLSA has reduced target price on Tata Motors to Rs 600 from Rs 650 per share but reiterated a buy rating. The brokerage also cut FY17-18 earnings per share (EPS) by 11 percent factoring in lower China volume growth and a 50 percent contraction in JLR’s China margin premium over other regions.
PSU bank stocks were in focus today as CNBC-TV18 learnt that the RBI has written to the finance ministry seeking more capital for PSU banks, urging for more than double capital infusion. The Finance Minister Arun Jaitley will hold a meeting with public sector bank heads on June 12 to review their performance. State Bank of India plunged 2.4 percent. PNB and Bank of Baroda were down over 3.5 percent.
Among private sector lenders, Axis Bank shed 3 percent while ICICI Bank and HDFC Bank were down more than 1 percent.
Larsen & Toubro, ITC, Infosys, TCS, ONGC, BHEL, Wipro and NTPC were other prominent losers, down 1-3 percent. However, Vedanta bucked the trend, was the only gainer in Sensex, up 1.54 percent ahead of likely board members meeting on June 14 for considering merger of Cairn India with the company.
In the broader space, Nestle India gained further, up 1.9 percent as it has approached Bombay High Court against the Food Safety and Standards Authority of India (FSSAI) and the Maharashtra FDA. The High Court will hear Nestle’s plea on June 12. Meanwhile, the US Food and Drug Administration began scrutiny into the Maggi mess, saying it is not yet clear if US products will be affected by the product recall in India.
AstraZeneca Pharma was locked at 20 percent upper circuit after the company launched FORXIGA (dapaglifozin), a treatment for Type 2 diabetes mellitus.
NALCO gained 3.5 percent as Credit Suisse initiated coverage on the stock with an outperform rating and a target price of Rs 57. The brokerage believes even as the company embarked on USD 900 million refinery expansion, healthy operating cash flows will keep it debt free in otherwise a debt laden industry.
Novartis India shot up 15.7 percent as media reports suggested that parent company may explore delisting of Indian unit. Novartis AG holds 75 percent stake in the company, as of March 2015.