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Sensex Continues to Tumble Under Global Pressure; Mid & Small Caps Plunge
Thu, 10 Aug Closing

Indian share markets continued to witness selling pressure in the afternoon session to finish lower for fourth consecutive session amid weak global cues and crackdown on shell companies.

At the closing bell, the BSE Sensex closed lower by 267 points and the NSE Nifty finished down 88 points. The S&P BSE Mid Cap finished down by 2.6% while & S&P BSE Small Cap finished down by 2.9%. Losses were largely seen in pharma stocks, auto stocks and realty stocks. Software sector finished in green.

Tata Motors share price fell 8.6% in today's trade its steepest fall in six months, to hit nearly 16-month low after it reported weaker earnings in both Jaguar Land Rover (JLR) and Indian operations.

The company reported a 41.54% jump in net profit to Rs. 31.99 billion for the June quarter of the current fiscal, benefiting from one-time gain relating to changes made to JLR pension plans.

However, JLR reported £442 million earnings before interest, tax, depreciation and amortization (Ebitda) in the June quarter, down 34% year-on-year.

On the domestic front, a sharp drop of 34% in medium and heavy commercial vehicle sales led to a loss of Rs 4.66 billion for the stand-alone entity against a profit of Rs 340 million a year ago.

Asian stock markets finished broadly lower today with shares in Hong Kong leading the region. The Hang Seng is down 1.13% while China's Shanghai Composite is off 0.42% and Japan's Nikkei 225 is lower by 0.05%. European markets are lower today with shares in London off the most. The FTSE 100 is down 1.00% while Germany's DAX is off 0.65% and France's CAC 40 is lower by 0.28%.

The rupee was trading at Rs 63.94 against the US$ in the afternoon session. Oil prices were trading at US$ 49.88 at the time of writing.

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In news from automobile sector, rating agency ICRA in its latest report has stated that the Indian passenger vehicle industry's long-term prospects remain favourable, supported by the factors like low penetration levels and increasing disposable income. It also said that domestic passenger vehicle sales will grow by 9-10% during the fiscal year 2017-18 and added that the sales are expected to grow in the range of 9-11% at a compounded annual growth rate (CAGR) over the next five fiscals.

As per the report, the price-cut post newly implemented goods and services tax (GST) and the low cost of car ownership due to falling interest rate and subdued fuel prices will provide impetus to the industry.

The rating agency further added that volume growth over the last few quarters is primarily driven by the compact utility vehicles. Thus, it is expecting that the utility vehicles segment to outperform overall industry growth in the near to medium term given the shift in customer preference towards utility vehicles and influx of new models.

Automobile stocks plunged with Escorts Ltd share price, Ashok Leyland share price and Eicher Motors share price all plunging more than 5%.

Power Finance Corp (PFC) share price fell 7.4%, and Rural Electrification Corp (REC) share price Ltd fell 6.7% in today's trade. A leading financial daily reported quoting CAG that said that there was a lack of due diligence from REC and PFC credit appraisal on loans.

Both the companies did not allow the RBI norms that have been prescribed for loans disbursed to private power companies.

In news from mining sector, Nalco share price fell 7.8% in today's trade after the company reported a sharp decline in its quarterly profits, triggering sell-off. The company'sQ1 net profit was down 4.5% at Rs 1.28 billion against Rs 1.35 billion, in the same quarter last year.

Meanwhile, revenue of the company has increased 14% at Rs 19.11 billion versus Rs 16.66 billion.

As per an article in The EnergyInfraPost, this may be a temporary blip in the PSU's stock market performance as its long-term growth plans remain the on track. Nalco has recently started producing AA 3105 alloy comprising aluminium, manganese and magnesium at the rolling plant of its smelter division, which is expected to add to the company's revenue and profits.

This is likely to boost the downstream units in electrical components and consumption market in the state of Odisha, fetching advantage in the GST regime.

In news from IPO segment, Security and Intelligence Services (India) Ltd (SIS) share price fell 7.2% compared to the issue price of Rs 815. The security services firm saw its Rs 7.77 billion issue get subscribed more than seven times last week.

The IPO is a fresh issue of 5.12 million shares, which at the upper end of the price band, will fetch Rs 3.6 billion to the company.

Airline stocks too finished deep in red with Jet Airways share price finishing down by 8.6% and Spicejet share price down by 5.2%.

India's aviation industry is on a high-growth trajectory. India's domestic air passenger traffic has almost doubled in the past six years. This is on the back of strong economic growth and emergence of low-fare airlines. Indian carriers have now set their sights on International traffic. Indian carriers have been slowly increasing their market share. It is important to note that foreign carriers still dominate international traffic to and from India.

Domestic Airlines Fly High in Foreign Skies

India's aviation industry is on a high-growth trajectory. According to International Air Transport Association (IATA), India has moved up two places to become the fourth largest aviation market in terms of passenger number. It's expected to become the third-largest by 2020. As per the report by rating agency ICRA, the share of domestic airlines in India's international traffic increased from 30.1% in FY14 to 35.1% in FY17.

And here's a note from Profit Hunter:

Tata Motors Ltd is among the top losers in the Nifty 50 Index today after the company's announced its quarterly results yesterday after market hours. The stock plunged 9% to a sixteen-month low.

In an earlier note, we mentioned Rs 423-431 as a strong support zone for the stock. This has proved to be an important zone several times in the past. We also mentioned that if the stock breaks and closes below this level we can expect some more pain in the counter.

Yesterday, the stock closed below this support zone, which opened up lower levels for the stock. And today, the stock opened gap down and crashed 9% with heavy volumes indicating weakness.

So it remains to be seen how much more downside is left for the stock after the break of an important support zone.

Tata Motors Crashed 9% for the Day
Tata Motors Crashed 9% for the Day 

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Jun 16, 2021 03:36 PM