The Hindu Business Line : Deal impacts other Tata stocks too

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Mumbai Jan. 31 Bourses turned negative on the Tata-Corus deal with Tata Steel coming under the hammer on the BSE and NSE. The stock plunged by 10.66 per cent to close at Rs 463.95 from Rs 519.3 on Monday at the BSE, while it shed 54.35 points at the NSE to close at Rs 464.9. The scrip opened on the BSE at Rs 499.

In a volatile trading session that saw the stock hit an intra-day low of Rs 464.9, 58.8 lakh shares changed hands at the BSE. Market men believe the company is paying too high a price for the acquisition.

"At 608 pence per share, the Corus purchase would put a considerable strain on the balance sheet and finances of Tata Steel," said Mr Vishal Chandak, Technical Analyst, Emkay Share and Stock Brokers, while Mr Ketan Sheth, Director, Way2Wealth Securities, thought, "the downward spiral was expected as the equity dilution of the group companies had not been clearly spelt out."

However, Mr Ratan Tata, Chairman of Tata Sons, said the stock markets were "taking a short term and harsh view."

The counter is expected to face selling pressure in the days to come though the long-term outlook is bullish, said Mr Sandeep Wagle, Chief Technical Analyst, Angel Broking.

"The outlook for the stock is positive for a long-term period of 2-3 years, because of the company` s strong fundamentals," said Mr Vishwas Agarwal, Technical Analyst.

Ahead of the auction, the Tata Steel counter witnessed hectic buying on robust Q3 results and reports that the company would not be able to clinch the Corus deal. On January 29, the stock rose by 1.4 per cent to Rs 519.3

Selling was also witnessed in other companies in the Tata stable, with the steepest fall being recorded in Tata Motors.

The stock plunged 2.42 per cent to end at Rs 899.55. TCS (down 1.37 per cent) at Rs 1278.6, Tata Power (down 0.68 per cent) at Rs 606.1 and Tata Tea (down 0.77 per cent) at Rs 711.05 were the other laggards from the group.

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