Mumbai: Auto stocks slid on Monday and dragged shares down after top car maker Maruti Suzuki posted a surprise 20% drop in quarterly profit on the weekend, casting a gloom on the outlook.
Maruti, which sells every second new car in India, dived more than 12% in its biggest intraday slide in over 6 years as brokerages downgraded the stock saying high royalty payments to parent Suzuki Motor Corp will squeeze its margins.
The result, coming ahead of the Reserve Bank of India’s(RBI) policy review on Tuesday, when the central bank is widely expected to raise key interest rates, dented investor confidence.
“Maruti is causing a lot of damage to the market today. Also, investors are cautious ahead of the RBI policy tomorrow,” said Neeraj Dewan, director of Quantum Securities.
By 11:18am, the 30-share BSE index was trading down 0.23% at 18,089.84, with 14 of its components declining. The 50-share NSE index was down 0.3% at 5,435.15.
Other Asian shares rose as solid US corporate earnings and surprisingly strong euro zone data offset growing scepticism that stress tests on European banks were not strict enough. The MSCI’s measure of Asian markets other than Japan was up 0.5%, while Japan’s Nikkei was trading 0.7% higher.
Maruti was trading at Rs1,216, down 10.5%, in volume of 889,810 million shares -- more than 10 times the 30-day daily average. UBS downgraded its rating on the stock to ”neutral” from “buy” and slashed its 12-month target price to Rs1,550 from 1,750.
Top motorcycle maker Hero Honda was down 5% while vehicles maker Tata Motors shed 0.9%. The sector index index dropped nearly 2%.
Financials were mixed ahead of the policy review. Top lender State Bank of India was down 1.8%, while rival ICICI Bank firmed 0.9%. A majority of economists expect the RBI to raise key interest rates by 25 basis points on Tuesday and tighten policy further in coming quarters, a Reuters poll showed last week.
Fortis Healthcare rose as much as 5.1% after sources told Reuters Malaysian state investor Khazanah was poised to offer to buy all outstanding shares of Singapore’s Parkway Holdings, bettering Fortis’ offer.
Khazanah’s latest offer will be around S$3.95 ($2.88) per share of the Singapore healthcare firm in response to the S$3.80 offered by Fortis, the sources said.
Non-ferrous metals producer Sterlite Industries climbed 0.5%, while top power utility NTPC dropped 0.1% ahead of their quarterly earnings.
In the broader market, gainers almost equalled losers on volume of 122 million shares.
STOCKS ON THE MOVE
* Eicher Motors (EICH.BO) hit an all-time high of 1,013
rupees after the commercial vehicles and motorbikes maker said
its April-June consolidated net profit nearly trebled to 551.8
million rupees [ID:nSGE66P06F]
The stock was trading 2.9% higher at 1,004 rupees.
* Engineers India (ENGI.BO) fell as much as 13%,
after the price band for a follow-on public offering of shares
in the state-run firm to raise up to $211 million was set at a
The stock was trading 8.5% lower at 308.85 rupees.
* Jaiprakash Associates (JAIA.BO) was down 4.4% at
122.90 rupees on concerns about margins after it reported a 5
percent rise in quarterly profit. [ID:nSGE60H05T]
Morgan Stanley said total revenues grew faster but
significant margin weakness across divisions mainly cement and
construction led to disappointment.