Sensex plunges 405 points, Steel stocks crash

The BSE Sensex buckled under broad based selling pressure, plunging 405 points or 2.3% to end at 17,196. The broader Nifty index declined 136.50 points to close at 5,228.

The Nifty closed below the 50-day moving average today, something that does not auger well for bulls. It is now trading close to the crucial support of 5,180.

"Markets have been very volatile in the short term. If we close below 5,150-5,160, the medium term becomes negative and we may go down to 5,000-4,900 levels," Somil Mehta, Senior Technical Analyst (Equity) at Sharekhan told NDTV Profit.

A mix of domestic and global factors hurt sentiments. A rollback in passenger fare prices did not go down well with investors hoping the government to move towards fiscal consolidation. The leakage of a draft CAG report, which alleges the government of extending undue benefits to commercial entities by giving them 155 coal acreages without auction during 2004-09, also weighed on sentiments. China's manufacturing sector contracted for a fifth straight week. China, the second largest global economy, is the powerhouse of global economy.  

All 14-sectoral indices on the BSE traded with deep losses. High beta realty (-4.2%) and metal (-3.3%) stocks led the declines. Banks (-3.4%), power (-3.6%), capital goods (-3.4) and consumer durables (-3.1%) indices also saw selloff.

JSPL (-7.2%) was the top Nifty loser. The stock came under the hammer on the back of the CAG report. Other steel and power companies also came under selling pressure. JSW Steel (-7.6%), Reliance Power (-5.9%) and Tata Steel (-4.8%) ended with deep cuts.

These stocks sold off despite market analysts saying that there was nothing wrong with the government not taking the auction route.

"CAG is telling one-sided story. This is a normal practice followed everywhere in the world. It's the same thing as giving incentives such as excise duty exemption, lower interest rate, etc. I don't think we should read too much into it," Rakesh Arora, MD & Head of Research at Macquarie Capital Securities (India) told NDTV Profit today.

Only two stocks- Coal India (2.3%) and Hero MotoCorp (1%)- closed with gains on the 50-stock Nifty index.

Market bellwether Reliance Industries (-4.1%) slumped and added nearly 70 index points on the Sensex on the downside.

Shares of gold loan companies plunged today after a Reserve Bank of India directive capping the loan-to-value ratio at 60%. Muthoot Finance (-9.9%) shares hit 52-week low while shares of Manappuram Finance plunged 18.5%.

The market breadth was extremely weak and only 15% stocks closed with gains on the BSE 500 index.

Earlier in the day analysts had told NDTV Profit that Indian markets lacked the fundamentals for sustained up move from these levels. "The huge international liquidity which has flowed into India has ignored a lot of negativity at the grassroots level. The one big positive is some easing stance of monetary policy which can give some firepower to markets. However, I am not very confident from structural perspective. I don't see any measures that can boost investment growth in the country," Vikas Khemani, EVP & Head of Institutional Equities at Edelweiss Securities said.

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Sensex plunges over 250 points, 10 stocks to focus on

New Delhi: 

India's benchmark Sensex plunged as corporates said the higher excise duty and service tax proposed in the Budget would hurt growth. At 1440 hours, the Sensex was down 226 points or 1.3% at 17,450 while the broader Nifty index traded 66 points lower at 5,314.

The finance minister has also proposed to retrospectively change the tax law as far as the Vodafone case is concerned and this will not go down well with foreign investors, analysts told NDTV Profit.

According to the Budget proposal, offshore transfers will be taxed in India if the shares derive its value substantially from assets in India.

"This will be very negative from FDI and FII perspective. I would like to think this would not happen because this is something that should not be done," Tarun Kataria, chief executive office of Religare Capital Markets said.

Here are 10 stocks that have seen strong movement post the Budget announcement:

1) Sun Pharma: down over 7%, biggest Nifty loser
Why: MAT to be levied on limited liability model. Sun Pharma works on limited liability model.

2) Cairn India: down over 5%
Why: Cess raised from 2500/mt to 4500/mt (from $7/bbl to $12/bbl). Brokerage firm CLSA says raising cess is negative.
Other stocks affected: ONGC, OIL and RIL.

3) Standard Chartered IDR: up 20%
Two-way fungibility on IDRs have been allowed.

4) Motilal Oswal: up 2.5%

Why: STT has been cut.
Other stocks affected: Geogit BNP Paribas, Prime Securities, JM Financial.

5) Coal India: up 1.5%
Why: Coal duty abolished

6) Atlas Cycle: up over 15%
Why: Import duty on cycles and parts cut

7) Jet Airways: down 2.5%
Why: No progress on FDI in aviation.

8) M&M: up 2%
No additional hike in excise duty

9) ITC: up 3%
The stock has gone up despite hike in excise duty.

10) Petronet LNG:
Import duty cut.

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