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Tuesday, 23 September 2014

Geopolitical tensions drag Sensex 431 pts; DLF, Cipla crash

The market shattered on Tuesday with the benchmark indices falling 1.58 percent on weak Eurozone data and launch of air strikes against ISIS in Syria by US military.

 The 30-share BSE Sensex fell 431.05 points (the biggest fall since July 8, 2014) to close below the 27000-mark at 26775.69 while the 50-share NSE Nifty managed to hold the 8000 level, down 128.75 points at 8017.55. The broader markets too lost shine with the BSE Midcap and Smallcap indices 2-2.5 percent.

 The fall was amid huge market turnover of more than Rs 6 lakh crore today. Experts believe the fall may extend a bit further due to weak global cues but upcoming positive events may cap that downside. 

The Indian market may correct around 2-4 percent but there are plenty of positive triggers in the near-term that must allow it to head in a positive terrain, believes Mehraboon Irani of Nirmal Bang Securities.

 According to Irani, Prime Minister Narendra Modi’s US visit, divestment news, achieving fiscal deficit target and state polls (Maharashtra and Haryana on October 15) will add optimism in the market for at least next 2-4 months. 

The only issue that the Indian market may now face is inflation, which continues to remain sticky and may restrict the RBI governor Raghuram Rajan from cutting rates in the near future. 

On the global front, European markets fell 1-1.5 percent (at 16 hours IST) on poor flash PMI data, weak US housing data and geopolitical tensions. The US and five Arab allies have carried out the first strikes against Islamic state militants in Syria. The Pentagon said warplanes, drones and tomahawk missiles were used in the attacks, which targeted several ISIS held areas.

 On the home turf, all sectoral indices ended in red with the BSE Realty, Oil & Gas, PSU, Capital Goods, Metal and Healthcare falling 2-5 percent. Bank, Auto and Power were down 1.5-1.9 percent. However, FMCG and IT (so called defensives) outperformed, down 0.4 percent and 0.6 percent, respectively. 

Realty major DLF tanked nearly 7 percent after the Delhi government hiked circle rates - the minimum valuation at which properties have to be registered - by up to 20 percent with an aim to check black money component in sale and purchase transactions. The new rates will come into effect from today.

 Cipla dropped 4.65 percent followed by Tata Motors, Tata Steel and Hindalco Industries with 3-4 percent loss. Shares of ICICI Bank, Reliance Industries, L&T, ONGC, Sun Pharma, Axis Bank and Bharti Airtel dropped 2-3 percent.

 Utility vehicle maker Mahindra and Mahindra slipped 2 percent after Credit Suisse downgraded the stock to neutral, citing unattractive valuations. The brokerage cut its earnings estimates by 5 percent, but raised target price to Rs 1,470 as the value of subsidiaries has gone up in line with the rest of the market. 

Shares of TCS, Infosys, HDFC and HDFC Bank declined around a percent. However, ITC, Hindustan Unilever, NTPC and Wipro bucked the trend, up marginally. 

In the broader space, Suzlon Energy, Delta Corp, India Cements (despite the news of demerger of Chennai Super Kings division), Anant Raj, Andhra Bank and Snowman Logistics were down 5-10 percent. However, HCC and Indiabulls Power gained over 3 percent.

 PSU banks like OBC, Andhra Bank, Allahabad Bank, Canara Bank, Union Bank, Bank of India, IDBI Bank, Syndicate Bank, Bank of Baroda and IOB tumbled 2.5-6 percent.

 Sharda Cropchem saw a strong debut today, up 48.37 percent to close at Rs 231.45 compared to issue price of Rs 156. It touched an intraday high of Rs 273.85 and low of Rs 225 after opening at Rs 254.10.
 Decliners beat advancers on the Bombay Stock Exchange by a ratio of 2129 to 890 while about four shares declined for every advancing on the National Stock Exchange. More information please visit this Site

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