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The markets started trade on a weak note on Friday with the S&P BSE Sensex skidding over 200 points on opening moves to 18,400 levels while the 50-share Nifty hit its lowest level in 2013 – slipping 71 points to 5436 levels. In the past two sessions, the Sensex has lost nearly 1,000 points, severely denting investors’ confidence amid Reserve Bank of India’s measures to arrest the sliding rupee.
Eight stocks – State Bank of India (SBI), Larsen and Toubro (L&T), ICICI Bank, HDFC Bank, Grasim Industries, Jaiprakash Associates, Bank of Baroda and Bharat Heavy Electricals Limited (BHEL) from the CNX Nifty-50 hit their respective 52-week low in early morning deals on the National Stock Exchange (NSE).
“Worsening financial scenarios, tighter credit conditions and rising burden of structural adjustments are likely to diminish prospects of recovery in the short and medium term. Overall, we believe, the elevated level of current account deficit, despite very weak domestic demand exposes India to significant currency vulnerability in the context of US Fed tapering scenario,” said Dhananjay Sinha, head of institutional research, Emkay Global Financial Services.
“In our view, the RBI measures may have only a minor impact on resident remittances, but could have a relatively larger impact on outward FDI. Indian companies’ outward FDI have been growing in recent years for various reasons (pursuing growth markets, technology, natural resource etc.) and these could be adversely hit. While the authorities aim to reduce ‘FX volatility’, we fear that they may end up sending a panic signal,” points out Sonal Varma, an economist at Nomura.
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Around 30 stocks from the BSE A Group, including Grasim Industries, Jaiprakash Associates, Dish TV India and Siemens India also recorded their 52-week low levels.
The pain is more severe for most banking stocks with most stocks hovering at their multi-year lows. YES Bank, Axis Bank, Bank of Baroda, Bank of India, Canara Bank, Union Bank of India and Punjab National Bank are trading down in the range of 2 – 4% on Monday morning.
Sintex Industries, SpiceJet, IVRCL, Voltas, Punj Lloyd and HCL Infosystems are among the 64 stocks, which hit 52-week low on BSE.
“Our underweight (UW) view on Banking has strengthened, as we continue to see a further downside in valuation, particularly for PSU banks. We like private players HDFC Banks and ICICI Bank to capture valuation picks,” points out Sinha.
