Sensex ends at 3-mth low, down 317 pts; Hindalco dips 4.5%

Indian equities saw heavy selling pressure on Tuesday with the key benchmark indices closing at 3-month low, impacted by European concerns.

The 30-share BSE Sensex fell 316.55 points or 1.64 percent to close at 19,015.14 after hitting an intraday low of 18,976.94.

Meanwhile, the 50-share NSE Nifty dropped 93.40 points to 5,761.35, led by heavy fall in oil & gas, capital goods, auto and banks.

European markets namely CAC, DAX and FTSE moved down between 1-2 percent after elections in Italy left the country facing political deadlock, with banks suffering the most as the vote raised new fears over the euro zone's debt crisis. Asian markets too closed lower, falling between 0.5-2 percent.

Among the sectoral indices, the BSE Oil & Gas, Metal, Auto, Capital Goods and Healthcare were down 2-3 percent while Bankex slipped 1.7 percent.

Back home, Hindalco Industries, Bajaj Auto, HDFC, ONGC and Reliance Industries were the prominent losers, with the stocks down between 3.5-4.5 percent.

Healthcare firm Ranbaxy Labs crashed 4 percent after reporting a fourth quarter consolidated net loss of Rs 492 crore, lower than the Rs 2,983 crore loss it reported a year ago. The company incurred a loss from operations of near Rs 28 crore in Oct-Dec, versus a year ago profit of Rs 630 crore, excluding other income, finance costs and exceptional items.

However, Infosys and TCS bucked the trend, rising 1.5 percent.

Telecom major Bharti Airtel gained 1.4 percent as major GSM players decided to stay away from spectrum auction. The research firm Citi recommended a buy rating on Bharti with a target price of Rs 397. "Not applying for the upcoming spectrum auctions should help lower the hit from license renewals," Citi reasoned.

Not only benchmarks but midcaps and smallcaps too hit quite badly. The BSE Midcap Index went down 1.8 percent and Smallcap slipped 2.43 percent.

Indian equity benchmarks fell quite sharply in afternoon trade with the Sensex losing more than 300 points following drop in European markets. The 50-share NSE Nifty broke the 5800 level for the first time since November 29, 2012. The proposed freight hike in the railway budget too dented sentiment.

The index slipped 103.65 points or 1.77 percent to 5,751.10. Meanwhile, the 30-share BSE Sensex plunged 346 points to 18,986, impacted majorly by financials, oil & gas, auto and metals.

European markets namely CAC, DAX and FTSE went down between 1-2 percent after elections in Italy left the country facing political deadlock, with banks suffering the most as the vote raised new fears over the euro zone's debt crisis.

Back home, the government proposed a hike of five per cent freight rate in the rail budget which might increased burden on the corporate earnings. Share prices of companies that cater to the railway sector were under pressure and tanked up to 8 percent as Railway Minister Pawan Kumar Bansal delivered his maiden Rail Budget in the Lok Sabha.

Brokers said there was no benefit announced for the railway wagon makers which dampened the sentiment further. Kalindee Rail Nirman was the largest loser and dropped 8.10 percent on the BSE, followed by Hind Rectifiers which dropped 6.71 percent and Kernex Microsystems which fell by 6.42 percent. Among others, Stone India tanked 6.53 percent, Titagarh Wagons was down 5.65 percent, Texmaco Rail (down 4.87 percent), Zicom Security (down 3.60 percent) and BEML (down 2.17 percent).

Midcaps and smallcaps crashed for the second consecutive session, with the indices down around 2 percent.

The BSE Oil & Gas index hit quite badly, falling more than 3 percent. Meanwhile, Auto, Metal, Capital Goods and Realty indices were down 2-2.5 percent.

About 1,186 equity shares declined as against 256 shares advanced on the National Stock Exchange.

Equity indices extended their losses, with the Nifty slipping below 5800 for the first time in nearly three months. The market was hoping for some tough decisions, especially in the form of higher passenger fares. While fares were hiked in January, a higher fuel bill will negate much of it. Once again, the burden has been passed on to freight.

The BSE Sensex is now down 213 points at 19117, and the Nifty is down 65 points at 5789. Midcap stocks continue to be the biggest losers, with brokers attributing the slide to unwinding of positions by traders unable to meet margin calls.

Shares of companies supplying equipment to the Railways fell sharply as investors do not see any big orders coming their way from announcements in the Rail Budget.

Titagarh Wagons, Kalindee Rail, Kernex Micro were among the prominent losers, with the stocks down between 3-6 percent.

Meanwhile, the broad-based sell-off in mid and small cap shares continued unabated. A handful of stocks which were pounded on Monday were steady, but most others continued to be under pressure.

Among frontline shares, Tata Motors, Hindalco, ICICI Bank and HDFC were the big losers, shedding 3-4 percent.

In the midcap space, Educomp Solutions topped the list of losers, down around 9 percent. Realty majors DB Realty, Purvankara Projects and Prestige Estates were down around 7 percent each. Brokers said fundamental factors were as much to blame as technical factors, in the case of realty shares.

"BSE Realty is up 30 percent and has outperformed Sensex by 21 percent over last 6 months. While there are signs of bottoming out (signs of uptick in residential demand, increasing prices), stock prices have been driven more by optimism about future recovery than tangible improvement in operating parameters. Operational improvement needs to catch up for the outperformance to continue,'' said a note by brokerage house Citi on the realty sector.

Barely few hours to go for the big announcement on Railways and key railway stocks remain laggard in a listless market. BSE Sensex and NSE Nifty continue to languish at 19202.94 (down 128 points) and 5814 (down 40 points), respectively.

Kalindee Rail has fallen over 3 percent and Texmaco Rail was struggling at Rs 60, down 2.6 percent.

Ranbaxy was trading marginally down ahead of its results. Analysts expect revenue degrowth of 30% YoY to 2667cr due to a high base effect. The stock was the biggest gainer yesterday after the company reintroduced production of Lipitor generic; CLSA upgraded it to outperform with a target price of Rs 475.

Pantaloon continues to trade flat after reporting weak set of numbers in the December quarter. JP Morgan has put a target price of Rs 215 and remains underweight on the stock.

Telecom stocks look stable and Bharti Airtel trades with over 4 percent gains after it decided not to participate in the spectrum auction. The stock was up 4.5 percent. Idea Cellular and Reliance Comm  too were trading in the green.

Equity benchmark opened vulnerable, forced down by auto and metals. Big boys L&T and ICICI Bank continue to underperform. Investors continue to pin their hopes on Tech stocks with Infosys, TCS, HCL Tech appreciating from their previous closing levels.

Telecom stocks are likely to find takers after they cold shouldered the 1800-MHz spectrum auction. Bharti Airtel sat on top of the gainers heap after it decided not to participate in the spectrum auction; the stock was up 4.5 percent. Idea Cellular and Reliance Comm  too were trading in the green.

At 09.35 am, the cut got deeper with Sensex falling 121.79 points or 0.63% at 19209.90, and the Nifty fell 40.05 points or 0.68% at 5814.70.

Top losers include big auto names like Maruti, Tata Motors, Mahindra and Mahindra, Bajaj Auto and Hero MotoCorp. Maruti lost 2 percent after the Reserve Bank barred further FII participation (in the company) as the limit of 24% of paid up capital has been breached. Hero MotoCorp has been weighed down by labour problems.

In the metal space, Coal India, Tata Stell, Hindustan Zinc and NMDC were trailing.

Rail stocks would be in focus as Railway Minister Pawan Kumar Bansal gets ready to deliver his maiden Rail Budget at 12 pm in the Lok Sabha today. The Budget is expected to lean towards pragmatism and fiscal prudence. However, none of the stocks in this space look convincing. Texmaco, Kalindee Rail Nirman, ABG Shipyard, Titagarh Wagons etc opened 2-3.5 percent down.

BHEL moved up 1% on signing MOU with Indian Railways for a multiple unit coach factory at Bhilwara in Rajasthan. The entire cost will be borne by BHEL while the Rajasthan govt will provide land for setting up the project.