India: Market Tailspin Continues

Includes: EPI, IFN, IIF
by: Equitymaster

Markets moved deeper into the red during the final hour of trade as weakness intensified in heavyweights from the metal, realty and banking sectors. While selling pressure was witnessed across sectors, select FMCG and pharma stocks found favour. As regards global markets, the Asian indices closed in the red, while the European indices have also opened on a negative note.

The BSE Sensex closed almost 480 points lower, while the NSE Nifty closed lower by 160 points higher. The BSE Midcap and Smallcap indices also closed in the red, down by 3% and 2% respectively. The rupee was trading at 49.32 to the dollar.

Taking cues from their Asian peers, the Indian indices opened below the dotted line. The indices embarked on a downward journey and continued to mount losses during the ensuing hours of trade.

Post-noon, feeble upward movement was witnessed as buying activity got triggered at lower levels. However, capitulation continued right up to the final hours of trade and the day ended without any respite in sight. The overall market breadth was negative with losers outnumbering gainers by a ratio of 3.3 to 1 on the NSE.

While Hindustan Unilever (up 1%) and ITC (marginally up) emerged as gainers on the BSE Sensex today, Tata Steel (down 14%) and Sterlite Industries (down 9%) led the pack of losers.

As per a leading business daily, BHEL has received Rs 6.4 bn contract for setting up a 412 MW hydro electric plant from Satluj Jal Vidyut Nigam. The project is expected to be commissioned within 42 months.

BHEL's scope of work in the project includes design, manufacture, supply, installation and commissioning of complete electromechanical works for the project. The fact that BHEL continues to build upon its order book (more than Rs 1 trillion in 1QFY09, 5 times FY08 sales) provides strong visibility into its future growth prospects. The stock (marginally down), along with its peers L&T (down 5%) and ABB (down 9%), ended lower. Voltas closed higher by 3%.

Pantaloon Retail announced results late yesterday. In 1QFY09, the company reported 39% YoY growth in topline backed by new store openings. During the quarter, Pantaloon opened 18 stores expanding its retail space from 7.9 m sq ft to 8.6 m sq ft.

Even in these inflationary times, the company was able to curtail its operating costs which resulted in 1.4% expansion in EBITDA margins. Despite higher other income and strong growth in operating profits, net profits reported lukewarm growth of 22% YoY. The same is the result of higher depreciation charges and interest costs. The stock ended flat, while its peers Trent and Shoppers’ Stop (each down 3%), closed in the red.