Profit booking post SEBI order drags Sensex 259 pts, Midcap 1%; Nifty below 10K
Equity benchmarks ended near a two-week closing low on Tuesday, with the Sensex shedding 358 points intraday on profit booking post a SEBI order on shell companies and global weakness.
Barring the Metals index, all other sectoral indices ended in the red, with Realty falling the most (down 4.4 percent) followed by PSU Bank (2.4 percent).
The 30-share BSE Sensex managed to hold 32,000 level, ending down 259.48 points at 32,014.19. The 50-share NSE Nifty touched an intraday low of 9,947, before closing 78.85 points lower at 9,978.55.
The broader markets erased the previous day’s gains as the BSE Midcap and Smallcap indices lost more than a percent on unwinding of leverage positions post the SEBI order restricting trading in 331 companies. More than three shares declined for every share rising on the BSE.
The Securities and Exchange Board of India (SEBI) released names of 331 suspected shell companies as identified by corporate affairs ministry. The list included Gallantt Ispat, J Kumar Infra, Pincon Spirit, Parsvnath Developers, Prakash Industries, SQS BFSI, Rohit Ferro, REI Agro and Assam Company, which were not available for trading today. Trading in these shell companies were allowed only once a month.
This SEBI order, which is a part of the plan to clean up corporate sector and markets, came in after the regulator told companies last week to disclose all loan defaults in 24 hours.
The impact of this order was seen in other high leveraged stocks, especially realty and construction stocks. HDIL, DLF, GMR Infrastructure, HCC, Punj Lloyd, Jaiprakash Associates and Jaypee Infratech were down up to 20 percent.
Banks were down, possibly on worries of loan repayment by such companies. Nifty Bank was down 1.2 percent and PSU Bank lost 2.4 percent. ICICI Bank, SBI, Kotak Mahindra Bank, Axis Bank, PNB and Bank of Baroda slipped 1-2 percent.
Metals bucked the trend after better-than-expected Tata Steel’s June quarter earnings and strong numbers from Novelis (the subsidiary of Hindalco Industries). Tata Steel, Hindalco Industries and Vedanta gained up to 4 percent.
Cipla gained 2.3 percent on US FDA approval for HIV drug, Nevirapine while Bajaj Auto rose 0.8 percent on partnership with Triumph Motorcycles to deliver mid-capacity motorcycles.
Bharti Airtel ended with 0.3 percent gains after it sold 3.65 percent stake in Bharti Infratel to global investors through block deals in opening trade. Bharti Infratel lost 4 percent.
Among others, Dr Reddy’s was biggest loser, down 5 percent followed by ITC, Coal India, BHEL, Reliance Industries, Maruti Suzuki and L&T.
Sintex Industries plunged 12 percent, while its subsidiary Sintex Plastics Technology was down 5 percent on day 1.
Sugar stocks also saw selling pressure. Dhampur Sugar, Dwarikesh Sugar, Balrampur Chini and Triveni Engineering shed 5-10 percent.
However, Century Textiles, Muthoot Finance and Future Retail outperformed, up 1-5 percent post Q1 earnings. Jubilant Foodworks was up 5.4 percent after announcement of the largest-ever upgrade this year for Domino’s that will cost the company Rs 100 crore.
European equities were marginally lower post earnings reports and weaker-than-expected trade data from China and Germany. Asian markets closed mixed.
