Street leaves M&A majors in red

The markets witnessed big volatility today as the benchmark Sensex swung nearly 400 points during the day, before ending 99.72 points lower at 14,090.98 points (down 0.70 per cent).

Merger and acquisition (M&A) specialists Tata Steel, Hindalco and Suzlon slipped further on view that their multi-billion buyouts would strain finances.

The index went below 14,000, to 13,957.70 points during the day on concerns over rising inflation and interest rates, which was reiterated by the Reserve Bank of India Deputy Governor Rakesh Mohan today.

The broadbased S&P CNX Nifty shedded 13.75 points (down 0.34 per cent) to 4,044.55 points, hitting a low of 3,998 intra-day.

Kumar Mangalam Birla Group company, Hindalco, which announced $ 6 billion acquisition of Atlanta-based aluminium maker Novelis two days back, got battered for the second day running, sending the stock price to a one-year low of Rs 142.10 (down 4.92 per cent from yesterday) and led to a meltdown in metal stocks. The stock has now wiped off 17 per cent of its value, after the announcement of the Novelis acquisition.

Tata Steel, which slipped by 2.59 per cent today to Rs 432.25, has lost over 16 per cent since it won the bid to acquire Corus Steel.

Suzlon Energy, which too announced $1.33 billion bid to acquire German Repower, ended its losing streak and gained 1.68 per cent to Rs 1,098.20 today.

"With announcement of big acquisitions, Hindalco and Tata Steel have moved into long-term orbit, which means investors have to wait at least three years from now to see a profit situation. At these levels, the investor definitely takes a call on whether to stay invested in these stocks or shift focus to some other scrips," Shashi Bhushan of IL&FS Investmart said.

Bhushan saw the market volatility more because of unwinding in the realty stocks in the F&O segments, which had a cascading effect on the rest of the market.

On concerns of slowdown and excess valuation buzz, some realty and construction stocks have lost big scales during last few days.

"The last week's rally lacked volumes most of the times. It gave a signal that this could result into markets going down. Besides, the valuations of many stocks had reached the fullest level," said another analyst.

Bajaj Auto, gaining ground on its proposed demerger plans, continued better performance. The scrip was the top gainer to Rs 3,046 (up 3.48 per cent). ONGC was up 2.21 per cent to Rs 884.85. Bharti Airtel grew 1.48 per cent to Rs 739.60, Ranbaxy to Rs 415.15 (up 1.42 per cent) and Wipro to Rs 637,60 (up 1.36 per cent).

Reliance Communications, which failed to clinch the Hutch deal, lost 3.07 per cent to Rs 441.05. L&T lost 2.80 per cent to Rs 1,612.95, and Maruti to Rs 890.95 (down 2.59 per cent)

The BSE Metal index dipped 130.94 points to 8,485.49 points (down 1.52 per cent). The BSE IT index lost 1.05 per to 5,366.54 points and Bankex went down by 96.09 points (1.31 per cent) to 7,266.74 points. Infosys, HDFC and HDFC Bank were among the losers.