Sensex, Nifty End Marginally Lower; Major Metal Stocks Hit Lower Circuit
Indian equity benchmark indices erased all intraday gains in Monday’s trading session and ended marginally lower. Major steel stocks saw a massive selloff and hit the lower circuit, after the government’s decision on Saturday to impose heavy export duties on crucial steel making raw materials like iron ore and pellets.
"After a firm start, markets failed to hold on to their early upsurge and simply lost track to end marginally lower. Metal stocks bore the brunt while automobile, realty, and oil & gas stocks also came under selling pressure, thus dragging key indices lower," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
The 30 share Sensex shed 37.78 points or 0.07 per cent to end at 54,288.61. Its broader peer Nifty50 dipped 51.45 points or 0.32 per cent to settle at 16,214.70.
"The government’s decision to impose 15 per cent export duty on steel should lead to a significant correction in domestic steel prices (8-10 per cent) given India’s dependence on exports. Increase in export duty on iron ore would mainly benefit non-integrated players. The resultant policy uncertainties would slow down growth capex and could eventually force a reversal of duties but controlling prices appears to be the top priority for now. We cut earnings and FV by 25-34 per cent across ferrous coverage," noted Kotak Institutional Equities.
Tata Steel, JSW Steel, SAIL, and NMDC hit their new 52-weeks lows in Monday's session. Percentage wise Tata Steel ended 12.32 per cent lower at Rs 1,026.35 apiece on the NSE. JSW Steel ended 13.21 per cent lower at Rs 547.75 apiece, SAIL ended 10.42 per cent lower at Rs 74.35 apiece and NMDC ended 11.74 per cent lower at Rs 129.25 apiece on the NSE.
On the Sensex, Mahindra and Mahindra and Maruti Suzuki stood out as the stars of the day and ended 4.14 per cent and 4.07 per cent higher respectively.
The Nifty Auto index rose 1.8 per cent, as automakers stand to benefit from lower input costs following the tax changes. Maruti Suzuki India and Mahindra and Mahindra were the top gainers on the Nifty 50, rising 4 per cent each.
Other top gainers on the Sensex include Hindustan Unilever (2.35 per cent), Larsen & Toubro (2.21 per cent), Asian Paints (2.07 per cent), and Kotak Mahindra Bank (1.45 per cent).
Earlier in the day, Reserve Bank of India governor Shaktikanta Das told CNBC-TV18 in an interview on Monday that the Indian government would likely stick to its fiscal deficit target as specified in the budget and there may not necessarily be a need for increasing government borrowing just yet.
"Some part of nervousness was after RBI Governor Shaktikanta Das' statement that, ‘the market is “right in thinking” that the MPC wants to raise rates in the next meeting on June 8th. Thankfully, the downside was not that sharp and was probably protected as U.S stock futures gained as Wall Street looked to snap its 8-week losing streak," said Prashanth Tapse, Vice President (Research), Mehta Equities.
Shares of Paytm also surged 7.38 per cent post March quarter results.
Among individual stock moves, Divi's Laboratories and TTK Healthcare fell 9.5 per cent and 10.5 per cent, respectively, after their quarterly results.
"Technically, on intraday charts, the Nifty has formed a double top formation and on daily charts it has formed Hammer candlestick formation which is broadly negative. For day traders 16200 would act as a crucial support level, and below the same we could see a quick intraday correction till 16100-16050. On the flip side, fresh uptrend is possible only after 16300 intraday breakout. On breaching the level, the index could move up to 16400-16475," said Chouhan.
