Apex court ruling makes stocks retreat

Tags: News
The Supreme Court order rocked the stock market, with metal and power stock prices hit the most, by 10-15 per cent.

The impact on market sentiment led to correction in Sensex and Nifty after they peaked to record highs and wiped out the day's gains in the last 90 minutes of trading.

Sensex and Nifty, taking domestic and global cues, were heading for a new high just before the Supreme Court order led to a deep cut in metal and power stocks as well as impacting the other high beta cyclicals.

Sensex gained 211.19 points to touch 26,630.74, up from the previous close of 26,419.55 before taking a tumble triggered by the court order.

Finally, the Sensex closed at 26,437, up 17 points, while NSE Nifty closed at 7,906, down seven points.

The broader Nifty index touched a new record high of 7,968.25 before a steep fall in the last one and a half hours of trade.

Stocks of companies that had received coal block allocations plunged. Jindal Steel closed down 13.97 per cent at Rs 253, it fell more than 15 per cent in intra-day trade as it hit a low of Rs 248.15 on BSE. Hindalco too was down 9.56 per cent at Rs 164.65. Earlier, it fell more than 10 per cent as it touched an intra-day low of Rs 160 on BSE. Others like Sesa Sterlite lost 3.89 per cent to settle at Rs 280.25 and Tata Steel closed 4.79 per cent lower. Among power stocks, Reliance Power was down 4.07 per cent, Adani Power was down 4.09 per cent and Tata Power was down 3.42 per cent on BSE.

Barring defensives like BSE FMCG, Healthcare, IT and Auto indices, all the other major sectoral indices ended with losses.

The top gainers in the Sensex pack included Tata Consultancy Services (2.42 per cent), Dr Reddy’s Lab. (2.04 per cent), Hero Motocorp (1.88 per cent), Hindustan Unilever (1.81 per cent) and Maruti (1.71 per cent). BSE Metal index was the top loser, down 4.3 per cent followed by BSE Realty and Power indices down 2 per cent and 1.5 per cent respectively.

Banks also erased all gains, with public sector banks falling to close near the day’s low. Even the midcap (0.64 per cent) and the smallcap indices (0.42 per cent) ended lower by around half a per cent.

Commenting on the development Amar Ambani, head of research at IIFL said, “The Supreme Court verdict is a major negative for most metal and power companies. Both metal and power counters are expected to remain under pressure till September 1, 2014 when more clarity on the judgment is expected.”

Ajit Mishra, AVP, Equity Research, Religare Securities said, “Metal stocks during the last 4-5 weeks were not performing, and trading sideways to negative. Any kind of negative news in such a situation leads to panic selling.”

“Metal stocks will continue to bear the negative impact of the Supreme Court order for a couple of sessions with volatility on higher side as some investors have long positions and so far the reaction was witnessed only in the last one and a half hour of the trade. Traders didn’t have sufficient time to react to the fall in stock prices of the metal companies,” Mishra said.

“On the other hand, power stocks were not impacted so much as they are neither trading at a premium nor even at their fair value. They may trade sideways for a couple of sessions,” Mishra said.

Both foreign institutional investors and domestic institutions were net buyers of equities worth Rs 127.33 crore and Rs 45.71 crore respectively.

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