Sensex, Nifty slump ahead of CAD data

iifl30th September, 2013 : Comments by Amar Ambani, Head of Research, India Infoline 

The Indian equity market ended with sharp losses on Monday extending its losing streak to second straight trading session. In the past two days the NSE Nifty has lost nearly 200 points as investors faced the growing likelihood of a shutdown of the U.S. government, while political worries in Italy and a downbeat China manufacturing survey also acted as a dampener on sentiment.

Market participants preferred to exit their positions amid fears of a widening April-June current account deficit. Among the other important data to be released later today are August fiscal deficit data, Q2 balance of payment data and August Eight infra deficit data.

Barring the BSE IT index all the other major secotral indices ended in the red. The BSE capital goods index was the top loser, down 3%, BSE banking index down 2.9%, BSE realty index down 2.1% and BSE oil and gas index down 2.1%

Even the mid-cap and the small-cap index were down 0.2% and 0.6% respectively.

The CNX Metal index on the National Stock Exchange ended lower by 2.5%. Stocks like Tata Steel, Coal India, GMDC, SAIL, Hindalco, Sesa Goa and JSW Steel were among the prominent losers Commenting on the same, Amar Ambani, Head of Research at IIFL said, “JSW’s performance over the last two years has been challenging due to the regulatory measures undertaken by the Government to curb illegal mining. We expect blended EBIDTA/ton to decline in FY14 on account of the merger of the high cost operations of Ispat. In addition to the stretched balance sheet, we are also concerned about the foreign debt exposure (40% of total debt exposure) and ~US$1.6bn of revenue acceptances. JSW is set to be an underperformer in the near term due to the above challenges. We believe the recent rally in the stock should be used to exit the counter and downgrade the stock from Market Performer to Sell with a revised price target of Rs641”.

Finally, BSE Sensex closed at 19379 down 348 points, while NSE Nifty closed at 5,735 down 98 points over the previous close.

NMDC, Tata Steel, JP Associates, ICICI Bank, Coal India, BHEL, LT, HDFC, DLF and PNB were among the top losers in the Nifty.

ACC, Hindustan Unilever, HCL Tech, BPCL, Lupin and Sun Pharma were among the top gainers.

The advance-decline ratio favoured the bears. On the BSE, 1393 stocks declined against 896 advancing stocks, while 131 remained unchanged.

The INDIA VIX surged 10% at 26.65. It hit a day’s high of 26.65 and low of 24.91.

Stock News

Shares of SpiceJet Ltd plunged over 7% on reports that auditors have raised concerns about its ability to stay afloat as its operating losses have completely eroded its net worth.

Shares of Reliance Infrastructure was down 6% on reports that CRISIL downgraded company’s debt programmes and long-term bank facilities to ‘CRISIL A+/Negative’ from ‘CRISIL AA-/Negative’.

Shares of Reliance Power was down 4.5% after its CEO J. P. Chalasani resigned last week to pursue his entrepreneurial ambitions and re-locate overseas.

Shares of Allcargo Logistics gained by 1% after announcing the acquisition of US-based logistics firm Econocaribe Consolidators last week.

Shares of the Multi Commodity Exchange of India ( MCX) fell by 5% on report that index provider Morgan Stanley Capital International excluded the company from its small cap indices.