India Insight

Markets this week: Infosys, Sesa Sterlite top Sensex losers

March 14, 2014

The BSE Sensex closed in the red twice this week, eventually ending with losses of 0.5 percent. The week began with the benchmark index touching an all-time high of 22,023.98 points in trade on Monday, aided by strong foreign buying.

Shares retreated from record highs as investors booked profits and by Friday, some caution was setting in about the pace of recent gains.

Key economic data released this week showed prices cooling as wholesale and consumer inflation eased and industrial output rose slightly, raising hopes that the Reserve Bank of India would leave its key interest rate unchanged at its policy meet in April.

In the currency market, the rupee fell 0.2 percent for the week, snapping a two-week winning streak.

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

LOSERS

INFOSYS: Shares in Infosys, once considered the bellwether of the Indian IT sector, ended the week with losses of 9.4 percent after its chairman said revenue could grow at the lower end of guidance for this fiscal year.

“We retain our expectation of gradual recovery in the company’s fundamentals relative to peers, beyond near-term blip from multiple challenges,” Motilal Oswal wrote in a March 12 research note. The brokerage has a ‘buy’ rating on the stock with a target price of 4,000 rupees.
SESA STERLITE: The metal producer’s shares fell 7.8 percent this week, extending losses for the year to nearly 15 percent. Sesa stock struggled as iron ore prices posted their biggest one-day drop in over four years on Monday. Concerns that the Supreme Court may set a limit on the amount of iron ore it can mine in Goa also hurt sentiment.

“In our view SSLT should re-rate from current levels given the benefits of a diversified earnings stream, an increasing FCF [free cash flow] profile, and an improving regulatory environment,” JP Morgan said in a research note dated Jan. 29 while remaining ‘overweight’ on the stock.

TATA STEEL: Shares of the steelmaker lost 7.7 percent this week, making it the third biggest Sensex loser. Tata Steel stock is down 19.2 percent for the year so far.

“While Tata’s FY15-16E earnings should be driven by higher margins in Europe and India (volume growth), leverage is likely to be a concern… It also has high sensitivity to steel prices, interest rates and FX,” Goldman Sachs said in a Feb. 26 research note.

Of the 47 analysts covering the stock, 26 have a buy or equivalent rating while 10 have a sell or equivalent rating, according to Thomson Reuters data.

HINDALCO: The company’s stock fell 7.5 percent this week, compared to a 4.8 percent fall in the BSE metals index.

Hindalco “offers value to long-term investors despite volatility in LME [London Metal Exchange],” Motilal Oswal wrote in a research note dated March 7.

The brokerage maintains a buy rating on Hindalco stock with a target price of 143 rupees.

SUN PHARMA: Shares in the generic drugmaker shed nearly 5 percent this week as the U.S. FDA banned imports from a company plant at Karkhadi in Gujarat. Sun Pharma stock is, however, up 2.5 percent in 2014.

Of the 42 analysts covering the stock, 32 have a buy or equivalent rating, according to Thomson Reuters data.

GAINERS

Hero MotoCorp shares surged 6.1 percent, followed by Tata Power that rose 5.1 percent. Shares of L&T gained 4.8 percent, while the stock of India’s largest utility vehicle maker M&M climbed 4.6 percent. HDFC Bank ended up 2.8 percent for the week.

(Editing by Tony Tharakan; Follow Sankalp on Twitter @sankalp_sp and Tony @TonyTharakan | Disclaimer: This article is website-exclusive and cannot be reproduced in any form without permission)

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