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Continued fears of a weak monsoon, coupled with the Reserve Bank of India’s hawkish stance on rate cuts, pushed the benchmark Nifty and Sensex to their eight-month low on Monday.
With the fall, the bellwether BSE Sensex has lost over 11 per cent from its life-high of 30,024 points on March 4. It is now down 3.5 per cent on a year-to-date basis in 2015, making India one of the worst performing global equity markets. On Monday, the Nifty closed at 8044, down 71 points (0.87 per cent) while the Sensex closed at 26523, down 245 points (0.92 per cent). “The summer heat and the market heat seem to be taking a toll on not only the trader but also the market,” said Arun Kejriwal, founder, KRIS Research. “Traders have not made money in the recent past whether they went long (bought) or went short (sold) on equities.”
The stocks and sectors that bore the brunt of Monday’s market fall have merely extended losses made over the last many trading sessions. A look at the sectors and stocks that have fallen sharply since March throws up three distinct trends.
Big gain = big fallOne, true to the adage that what rises the most, must fall the most, mid- and small-cap stocks that were on a roll since September 2013 have given up a big portion of their gains.
Hindustan Construction, PTC India Financial, Gati, SREI Infra and Adani Enterprises were among the stocks that gained more than 80 per cent since the start of this rally. Gati had gone up nearly seven times, riding on e-commerce hopes. These stocks have lost 30-40 per cent from their highs of March.
Two, with the RBI turning hawkish in its recent policy review and hinting at ‘data-contingent’ rate cuts, markets have been unkind to debt-laden companies.
Unitech, Hindustan Construction, Jaypee Infratech, Shree Renuka Sugars, Adani Power and IVRCL are a few stocks that investors have rushed to dump post-RBI’s policy. Sachin Shah, Fund Manager & Head, Emkay PMS, said one of the major disappointments for the market has been RBI scaling up the inflation projection to 6 per cent by 2016.
Three, the string of disappointing earnings from corporate India for the March quarter has also spooked markets.
Sector-wise, cyclicals that were riding on big bang reforms since September 2013 have lost ground. BSE Bankex and the CNX Infra index which gained 60- 100 per cent from September 2013 till June, have lost heavily in the past few sessions.
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