India Insight

Markets this week: Sensex falls 1.3 percent, BHEL slumps nearly 10 percent

December 13, 2013

By Ankush Arora and Aditya Kalra

The BSE Sensex fell 1.3 percent in the week ending Dec. 13 after high retail inflation raised fears of a rate hike. Eight of 10 analysts in a poll on Friday said they expected the central bank to raise the repo rate by 25 basis points to try and tame stubbornly high inflation.

Before falling for four consecutive sessions from Tuesday, markets touched life highs on Monday. The BSE Sensex touched 21483.74 after sentiment on the street was boosted by the Bharatiya Janata Party’s win in three of five state elections.

However, profit-taking and the cautious outlook of investors before Thursday’s inflation data pushed shares lower, with the Sensex registering its worst weekly performance in nearly a month.

Here are the top five losers and gainers of the week:

LOSERS

BHEL: After rising for four consecutive weeks, shares of the power equipment company fell 9.6 percent in the week ending Dec. 13, making it the worst performer in the 30-share Sensex.

The stock has lost more than 30 percent this year, as compared to a drop of 9 percent in the BSE capital goods index. With such losses, the stock will end in negative territory for the fourth straight year.

In a Dec. 9 research report, Ambit said: “The power sector is yet to come out of the woods. We fear the investment capex cycle could take at least two years to pick up.”

JINDAL STEEL AND POWER: The stock ended the week with losses of over 8 percent. Company chairman Naveen Jindal is a Congress party lawmaker, and shares took a beating after election results showed that the BJP had won in three state elections.

Jindal Steel and Power, which is down nearly 42 percent this year, will be replaced by Axis Bank in the Sensex from Dec. 23. Of the 26 analysts covering the stock, 15 have a ‘buy’ or an equivalent rating, according to Thomson Reuters data.

NTPC: Shares in NTPC closed 7.8 percent lower this week, making it the third worst performing Sensex stock. On Tuesday, stocks of Indian power utilities, including NTPC, fell after the regulator proposed stricter rules for tariffs and operations for the sector. The guidelines are due to be finalised by March.

Experts believe these guidelines, if implemented, could dent the earnings of power utilities but reduce consumer rates.

“While we do not see meaningful downside from current levels for the (NTPC) stock, the overhang from the draft CERC (Central Electricity Regulatory Commission) norms for 2014-19 is likely to cap upsides,” Religare said in a note on Dec. 11.

STATE BANK OF INDIA (SBI): With the BSE banking index falling 3 percent this week, shares of India’s top lender SBI slumped 6.4 percent. The losses come after the stock rose for three straight weeks.

Higher-than-expected retail inflation has raised fears of a rate hike and hit the performance of banking stocks this week. Analysts covering the stock have a mixed outlook: of the 50 experts covering the stock, 20 have a ‘buy’ or an equivalent rating while 18 have a ‘sell’ or an equivalent rating, data showed.

TATA MOTORS: The stock extended its losses for the second week in a row, losing 5.3 percent this week. The BSE auto index, in comparison, fell 2.1 percent during the same period.

The automaker’s Jaguar Land Rover unit has said it would increase its capital spending to between 3.5 billion pounds and 3.7 billion pounds in fiscal year 2015 from an estimated 2.75 billion pounds in fiscal year 2014.

GAINERS: Shares in Sesa Sterlite and Wipro jumped more than 5 percent, while Infosys and HDFC Bank rose over 1 percent. ITC shares rose 1 percent.

(Editing by Tony Tharakan; Follow Ankush @adityayk, Ankush @ankush_patrakar, Tony @TonyTharakan|Disclaimer: This article is website-exclusive and cannot be reproduced in any form without permission)

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