India Insight

Sesa Sterlite, Bajaj Auto top Sensex losers this week

November 22, 2013

The BSE Sensex posted a third consecutive weekly fall, closing nearly 1 percent lower amid persisting worries over the slowdown in foreign investors’ buying into Indian shares.

Data shows FIIs sold shares worth $9.5 million on Thursday, snapping a 32-day buying streak as minutes from the last U.S. Federal Reserve meeting showed a decision on tapering its bond-buying programme may be taken at one of its next few meetings.

In the coming week, investors will keep an eye on July-September GDP data and fiscal deficit numbers for the April-October period. Here are the top Sensex losers and gainers of the week:

 

LOSERS

SESA STERLITE: Shares in the Vedanta unit closed 8.7 percent down this week making it the worst Sensex performer. It was the third consecutive week of losses for Sesa Sterlite.

On Nov. 12, the Supreme Court maintained a 14-month ban on iron ore mining in top producing state Goa. Sesa Sterlite, which is India’s leading private-sector mining firm, would be the biggest beneficiary if mining resumed in Goa.

“While we believe the ban could be temporary, there are chances of iron ore production cap by the government/MOEF which could affect Sesa’s production going forward. This is likely to be a key overhang on the stock in our view,” according to a Nov. 5 research report by Angel Broking.

Analysts tracking the stock have a mixed view: of the 34, 13 have a ‘buy’ or equivalent rating while 12 have a ‘sell’ or equivalent rating, according to Thomson Reuters data.

The stock has had a lacklustre year and quarter so far, down 10.7 percent in 2013 and 3.5 percent since Oct. 1.

BAJAJ AUTO: Shares of India’s second-largest motorcycle maker fell 6.8 percent this week, compared with a near 2 percent fall in the BSE auto index.

High interest rates, fuel costs and a slowing economy have dimmed the near-term outlook for the Indian auto industry. Bajaj Auto reported a 6 percent drop in its October sales as against an 18 percent increase in overall motorcycle sales in India, helped by festive demand and strong sales in rural areas.

The stock has lost 11 percent this year and the outlook is far from positive. Of the 57 analysts covering the stock, 25 recommend a ‘hold’, according to Thomson Reuters data.

Rival Hero MotoCorp, India’s largest maker of two-wheeled vehicles, fell 3.4 percent.

CIPLA: The pharma company extended its losing streak for the second consecutive week, closing 4.8 percent lower. The BSE healthcare index lost 1.8 percent this week.

On Thursday, Cipla announced its subsidiary has acquired an additional 14.5 percent stake in Uganda’s Quality Chemical for $15 million.

“An increased stake (in Quality Chemical) will enable the company to consolidate its position in the ARV (anti-retroviral) segment, though making not much of the impact on the numbers as such. We maintain our buy with a price target of 504 rupees,” said Sarabjit Kour Nangra, vice president (research), Angel Broking.

SUN PHARMA: A week after reporting a surge in its September-quarter net profit, shares in India’s top drugmaker by market value fell 4 percent this week.

The company’s September-quarter consolidated profit jumped to $214 million; the firm raised its FY14 revenue outlook to 25 percent from 18 percent.

Sun Pharma shares have gained 56 percent in 2013. “We believe that valuations should remain at a premium to its peers,” Fortune wrote in a research report on Nov. 14, while upgrading the stock to ‘buy’ from ‘hold’.

Jefferies has raised the stock’s price target to 680 rupees from 610 rupees.

GAINERS: Metal shares gained after China announced bold economic and social reforms last week. Tata Steel surged 4.5 percent. Jindal Steel and Power followed with gains of nearly 4 percent. State-run explorer ONGC gained 2.9 percent. Hindalco, an aluminum and copper producer, rose 2.7 percent while India’s largest engineering conglomerate, Larsen and Toubro, ended 2.6 percent higher.
(Editing by Tony Tharakan. You can follow Tony on Twitter @TonyTharakan and Ankush @ankush_patrakar )

 

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