Tracking Sensex: top gainers, losers in June quarter

By Reuters Staff
June 28, 2013

By Aditya Kalra and Ankush Arora

Indian shares ended the June quarter on a positive note as the Sensex and Nifty registered gains of around 3 percent during the period, data showed.

The markets managed to post gains in the quarter despite falling around 2 percent in June after the U.S. Fed said it plans to begin winding down its stimulus later this year if economic conditions are favourable.

In positive developments, monsoon rains arrived on time and covered the whole country two weeks ahead of schedule while inflation slipped below 5 percent. Sentiment was also boosted when rating agency Fitch revised its outlook on India back to “stable” from “negative”.

However, current account deficit concerns were exacerbated as rupee remained weak and fell below 60/dollar mark for the first time ever. Here are the top five gainers and losers of the June quarter:

GAINERS

Hindustan Unilever (HUL): India’s largest consumer goods maker emerged the best Sensex performer in the June quarter with gains of over 25.5 percent. Unilever, the parent company, said in April it will raise its stake in HUL to as much as 75 percent.

Of the 41 analysts covering HUL, 19 have a ‘sell’ or equivalent rating on the stock, while 14 have a ‘hold’, Thomson Reuters data showed.

“Given the risk of subdued volume growth, risk to earnings, the open offer from Unilever comes at an opportune time for investors, in our view, and presents a good exit opportunity,” Nomura said in a research note on June 27.

Dr Reddy’s Laboratories: Shares of the drugmaker surged 25.4 percent in the April-June period, with the company’s stock hitting a record high in May. Dr. Reddy’s reported better-than-expected 66.5 percent rise in the March-quarter net profit.

Increased traction in approvals from the U.S. FDA for new product launches is helping the company, a media report said.

Sun Pharmaceuticals: Shares of India’s largest drugmaker by market capitalization rose 23.23 percent in the three-month period, taking their gains for the year to almost 40 percent. In June, Sun Pharma said it will pay $550 million as part of its settlement in a patent infringement suit in the US.

ICICI Securities reduced the target price for the stock to 1,126 rupees but maintained a ‘buy’ rating. “The key risks to our view are: greater-than-expected volatility at Taro’s operations and slower-than-expected expansion of Indian pharmaceutical market,” it added.

Maruti Suzuki: India’s largest car maker ended the quarter with gains of a little over 20 percent at 1,538 rupees after its stock hit a 52-week high of 1,773.45 rupees on May 20.

The company’s May vehicle sales were down 14.4 percent. J.P. Morgan downgraded Maruti to “underweight” and cut its target price to 1,510 rupees on June 18, citing muted passenger car demand in India as one of the reasons.

Mahindra  &  Mahindra: The utility maker’s shares ended the quarter with gains of 12.23 percent at 966.55 rupees, despite ending flat in June. The company recently agreed to sell a majority stake in its auto component unit to Spain’s CIE Automotive for about $116 million. It also agreed to acquire a 13.5 percent stake in CIE for 94.24 million euros.

After warning fierce competition could erode its dominant SUV position, M&M in June made its first push into the small car market with the launch of Verito Vibe.

LOSERS

Jindal Steel: Shares in Naveen Jindal-controlled company slumped 38 percent in the April-June period, making it the worst performer among the 30 Sensex components.

Jindal Steel, which is down more than 50 percent in 2013, nosedived after the Central Bureau of Investigation filed a case against the company in the ‘coalgate’ scam on June 11.

Infosys: Shares of India’s No. 2 IT services exporter ended the quarter with losses of 13.72 percent as disappointing earnings outlook in April and worries over the proposed U.S. immigration bill weighed.

On April 12, Infosys missed analyst expectations by a wide margin when it forecast a dollar revenue growth of 6-10 percent in FY14. This made investors jittery and the shares fell over 20 percent to register their biggest single-day fall in 10 years.

In June, markets cheered return of Narayana Murthy as chairman, who pledged to turnaround the company within three years.

Tata Steel: As metal stocks struggled, shares in India’s largest steelmaker by market value ended the quarter with losses of 12.32 percent. Weak European operations have been a cause of concern for Tata Steel, which paid $13 billion to acquire Anglo-Dutch steelmaker Corus in 2007.

The company said in May that “severely depressed” conditions in Europe are expected to continue over the short-to-medium term. “Recent correction in stock price discounts the weak uncertain global environment and higher-than-estimated borrowing,” Avendus Securities recently said in a research note.

Sterlite Industries: This was another stock from the metals pack which made it to the top losers’ list of the quarter with losses of 11 percent. The company’s copper smelter in Tuticorin reopened this month, according to sources, after being shut down for two months on environmental concerns.

Shares in Sterlite have lost more than 30 percent in 2013 and are currently trading near levels last seen in early 2009. The company reported a 51 percent rise in its March-quarter profit on April 30.

Tata Power: Shares of the power company lost 10.73 percent in the quarter and touched their lowest levels since mid-2009 in June. Of the 34 analysts covering the stock, 11 recommend holding it while eight have a ‘sell’ or equivalent rating.

Tata Power said last month that it will hold off on major investments until it clarifies a regulatory decision to raise tariffs.

(You can follow Aditya on Twitter @adityayk and Ankush @ankush_patrakar)

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