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AFTER the positive reports on monsoon, now is the turn for negative news. The first victim of the news that monsoon is likely to be below normal in the stock market is cement stocks. The fear in the market is that this might lead to lower demand of cement in the next few quarters.

Another fear is that if the monsoon were below normal, construction activity would be affected which is the largest consumer of cement. The result of this was across the board selling in most of the cement counters. The selling was both from institutional investors and day traders.

Among the stocks that suffered due to monsoon blues include ACC (down 3.55 per cent at Rs 231.20 on the BSE), Birla Corporation (down 2.59 per cent at Rs 105.50), Gujarat Ambuja Cement (down 4.96 per cent at Rs 265.25), Madras Cement ( Rs 644, down 1.48 per cent).

Skid on weather worries

AFTER cement stocks, auto companies shares too came under the monsoon effect on Tuesday. Dealers said if there is slowdown in the monsoon, auto companies would be severely affected as in the last one year most of the business for these companies came from rural market.

Several players sold heavily in leading auto companies' shares. Dealers said the major concern for the two-wheeler companies is sustaining the growth.

The talk is that if the monsoon is below normal, there could be downgrading of most of these stocks and this could lead to heavy selling from FIIs as they have large exposure to the auto sector.

On Tuesday, the stocks that come under selling pressure included Bajaj Auto (down 2.59 per cent at Rs 891 on BSE), Hero Honda (down 4.06 per cent at Rs 467), Maruti (down 2.54 per cent at Rs 419.65), Tata Motors (down 4.37 per cent at Rs 404.55) and Ashok Leyland (down 3.50 per cent at Rs 20.65).

BPCL on downgrade dash

THE counter of Bharat Petroleum came under heavy selling pressure on Tuesday after a leading foreign broking firm downgraded the stock. The downgrade is on concern that the subsidy burden by the company would affect its profitability severely. The effect would not be as high for other oil companies, feels the firm.

After the downgrade, several institutional clients of the firm are believed to have sold the shares of the company. On Tuesday, BPCL stock declined 4.83 per cent at Rs 309.25 on the BSE with volume of 7.46 lakh shares and on NSE it closed at Rs 309.65, down 4.71 per cent, with volume of 16.48 lakh shares.

Virendra Verma

More Stories on : Stock Markets | Ear to the ground

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