The Hindu Business Line : Brokers, analysts downgrade several blue chip stocks

Mumbai, March 13 Brokers and analysts have downgraded several blue chip stocks as they feel that their valuation may be affected by current global and local developments in the short-term.

Though they are not openly admitting, officials with broking firms say that they have advised their clients accordingly.

Lowering rating

Motilal Oswal has recently downgraded engineering and construction major, Larsen and Toubro.

“We downgraded L&T due to the forex losses suffered by the company in one of their overseas subsidiaries,” said a an official with Motilal Oswal.

Goldman Sachs has reportedly downgraded Indiabulls Real Estate and Citigroup has lowered its rating of Suzlon Energy. Credit Suisse and Morgan Stanley has recently downgraded banking stocks such as Punjab National Bank, Indian Overseas Bank and Union Bank, SBI and Canara Bank.

In a note to its clients Credit Suisse stated that it lowered its earnings estimates for the banks between 2 per cent and 19 per cent.

overseas exposures

Analysts expect further downgrades in bank stocks, which have overseas exposures.

Mr Kaushal Sampat, Chief Operating officer, Dun and Bradstreet Information Services Pvt Ltd, feels that in the long-term the fundamentals seem good, but in the short-term there are a few challenges faced by large companies, arising out of liquidity and impact of sub-prime concerns

Analysts say the latest Index of Industrial Production indicates a slowdown in the manufacturing sector.

“Concerns about a slowdown of growth in our country along with the conditions in the US markets would lead analyst to believe that these companies would now face a slowdown in their numbers including their EPS.

large cap stocks

This, in turn, would lead to a lot of selling of these scrips,” explained Mr Naresh Kotari, President & Co-Head-Institutional Equities, Edelweiss Securities Ltd.

“As some of the mid-cap stocks are not as liquid as large caps, investors are forced to sell the large cap stocks, to meet their financial commitments,” said Mr Pankaj Bhansali, Head Equity, Religare.

Tough time

Analysts say that companies in the construction space are facing a tough time now as they are failing to meet their projections.

This has led to a lot of a selling in the scrips of these companies.

“The construction industry in particular has been downgraded because many of them have not met their targets for the current fiscal. The cement sector has also been affected due to high cost of oil and power,” said Ms Anita Gandhi, Head Institutional Business, Arihant Capital Market Ltd.

More Stories on : Stock Markets | Stocks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page