Capital goods, auto stocks drop

capital market | Mumbai | August 10, 2016 13:21 IST

Capital goods, auto stocks drop

Key benchmark indices continued to trade weak in afternoon trade. At 13:25 IST, the barometer index, the S&P BSE Sensex, was down 238.23 points or 0.85% at 27,846.93. The losses for the Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty 50 index was currently down 79.55 points or 0.92% at 8,598.70. The Sensex was trading below the psychological 28,000 level after falling below that level in morning trade. Weakness in global stocks weighed on sentiment adversely.

The Sensex lost 268.51 points or 0.96% at the day's low of 27,816.65 in early afternoon trade, its lowest level since 5 August 2016. The barometer index rose 58.12 points or 0.21% at the day's high of 28,143.28 at onset of trading session. The Nifty lost 93 points or 1.07% at the day's low of 8,585.25 in early afternoon trade, its lowest level since 4 August 2016. The index rose 11.85 points or 0.14% at the day's high of 8,690.10 at onset of trading session.

The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,725 shares fell and 768 shares rose. A total of 131 shares were unchanged. The BSE Mid-Cap index was currently off 0.76%. The BSE Small-Cap index was currently off 0.74%. The fall in both these indices was lower than the Sensex's decline in percentage terms.

In overseas stock markets, European stocks declined in early trade as investors assess the timing of the next interest rate hike by the US Federal Reserve as well as the outlook for oil prices. Asian stocks witnessed a mixed trend. US stocks eked out small gains yesterday, 9 August 2016, with the Nasdaq Composite index posting a fresh record close, as investors kept an eye on falling oil prices.

Auto stocks declined. Ashok Leyland (down 1.18% to Rs 88.3), Maruti Suzuki India (down 1.35% to Rs 4,901.2), Eicher Motors (down 1.22% to Rs 21,794.85), Hero MotoCorp (down 0.68% to Rs 3,384), and TVS Motor Company (down 0.69% to Rs 296.85) declined. Bajaj Auto rose 0.38% to Rs 2,875.10.

Mahindra & Mahindra (M&M) declined 0.49% to Rs 1,473.35 ahead of its Q1 June 2016 earnings today, 10 August 2016.

Capital goods stocks dropped. Bharat Heavy Electricals (Bhel) (down 1.4% to Rs 137.7), Havells India (down 1.96% to Rs 404.9), L&T (down 0.94% to Rs 1,483.5), Thermax (down 0.08% to Rs 904.75), Crompton Greaves (down 1.56% to Rs 82.1) and Siemens (down 0.6% to Rs 1,316.45) declined. BEML (up 1.27% to Rs 1,015) and ABB India (up 0.21% to Rs 1,201) gained.

State Bank of India (SBI) dropped 0.68%. The bank said that the Central Government after consultation with the Reserve Bank of India vide notification dated 9 August 2016, appointed Dinesh Kumar Khara as Managing Director of the bank for a period of 3 years from the date of his taking over charge of the post or until further orders whichever is earlier. The announcement was made during market hours today, 10 August 2016.

Grasim Industries and Aditya Birla Nuvo edged lower on reports that Aditya Birla Group is contemplating a merger of Grasim Industries and parts of Aditya Birla Nuvo. Grasim Industries dropped 4.41%.The company is set to announce Q1 June 2016 results tomorrow, 11 August 2016. Aditya Birla Nuvo lost 3.92%. The company is set to announce Q1 June 2016 results tomorrow, 11 August 2016. In their clarification to the stock exchanges, both the companies separately said that no such proposal has been considered or approved by the board of directors which would trigger disclosure requirement. Both the companies also said that shareholders are advised to exercise caution while trading based on speculative reports.

The reports suggested that as part of another round of corporate reorganisation, Aditya Birla Group is contemplating a two-step restructuring which involves the merger of Grasim Industries and parts of Aditya Birla Nuvo (ABNL), which is likely to be followed by the hiving-off of the financial services business of ABNL viz. Aditya Birla Financial Services (ABFS) into a separate company. ABFS is currently a 100% subsidiary of ABNL. The merger and the complete reorganisation could involve a number of steps. A direct merger of ABNL and Grasim Industries and the simultaneous spinning-off of financial services business into a separate company is among the options, reports suggested. A final announcement could be expected as early as this week, reports added.

Grasim Industries' two main businesses are viscose staple fibre (VSF) and cement. ABNL is a business conglomerate. It commands leadership position across its financial services, telecom, linen and manufacturing businesses.

Kennametal India dropped 3.42% to Rs 662.90 after net profit slumped 54.65% to Rs 7.20 crore on 1.91% decline in net total income from operations to Rs 154.79 crore in Q4 June 2016 over Q4 June 2015. The result was announced after market hours yesterday, 9 August 2016.

Motherson Sumi Systems fell 6.24% after consolidated net profit rose 15.81% to Rs 439.36 crore on 15.25% increase in total income to Rs 10454.11 crore in Q1 June 2016 over Q1 June 2015. The result was announced during trading hours today, 10 August 2016. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose 20% to Rs 928 crore in Q1 June 2016 over Q1 June 2015. The company said that the growth was fuelled by strong performance across the major product divisions and geographies.

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