India Insight

Markets this week: Sensex falls 2.6 percent, Jindal Steel slumps 9 percent

After rising for four consecutive weeks, the BSE Sensex fell 2.6 percent in the last five trading sessions, as a surprise repo rate hike by the Reserve Bank of India (RBI) on Sept. 20 dampened investor confidence and battered banking shares.

Rate-sensitive sectors were hurt — the banking index and the realty index lost over 7 percent in the week. YES Bank fell 14.5 percent, SBI lost 6 percent while shares of DLF slumped 13 percent.

While analysts expected the new RBI chief Raghuram Rajan to hold rates last week, expectations for monetary policy have suddenly shifted towards further tightening after the rate hike, a recent Reuters poll showed.

Here are the top losers and gainers of the week.

LOSERS

JINDAL STEEL AND POWER: The stock fell 9.2 percent this week, after rising for three consecutive weeks. Shares in Jindal Steel have struggled in 2013 and are down more than 47 percent.

JSPL’s stock has underperformed over the last one year on account of issues related to allocation of coal blocks. Selling has been further intensified due to subdued domestic steel demand and a decline in spot power realizations, IIFL said in a report on Sept. 27.

In a mixed year for lenders, IndusInd Bank shines

Rate cuts by the Reserve Bank of India, new bank licence norms, bad loan worries and money laundering accusations – Indian banks are firmly in the public eye in 2013.

Going by stock returns, lenders have had a mixed year so far. The BSE banking sub-index has gained less than 1 percent, as compared to the benchmark Sensex’s return of nearly 3 percent. Big banks such as the State Bank of India have lost 13 percent while HDFC Bank has gained around 4 percent. Some smaller players have struggled, with IDBI and Bank of Baroda falling more than 20 percent.

Small private lender IndusInd Bank, which focuses on retail lending, has been the star performer with gains of around 25 percent, making it the best performing stock in the 14-share banking index in 2013, data showed.

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