Indian shares fall on earnings downgrade fears

Indian shares fall on earnings downgrade fears

Mumbai: Indian shares continued to fall on Thursday as fears of earnings downgrades loomed large. Weak corporate earnings and concerns about a slowing economy made investors jittery of taking fresh positions. After a mixed opening the benchmark indices struggled to hold up in green as selling in Reliance Industries and banking stocks outweighed the gainers.

Sensex: 18,436 –0.36%

Nifty: 5,541 –0.46%

Reliance Communications, Kotak Mahindra Bank, IDFC, Sesa Goa and Reliance Industries led the losses in Nifty shares. Shares of Kotak Mahindra Bank slumped 3.53% after the bank said its net interest margins in June quarter contracted to 5% from 5.4% in a year ago period.

Concerned about the sustainability of margins, investors also sold stocks of Axis Bank and HDFC Bank. While Axis Bank lost 1.6%, HDFC Bank closed down by 1.3%. Goldman Sachs downgraded the HDFC Bank stock to sell citing margin pressures.

Sesa Goa fell 2.6% after preliminary purchasing managers index data indicated that manufacturing activity in China might contract in July. Sesa Goa exports most of its iron ore to China.

Reliance Communications: 90 –4.1%

Kotak Mahindra Bank: 473 –3.5%

IDFC: 136 –2.67%

Sesa Goa: 277 –2.6%

Reliance Industries: 858 –2.1%

Axis Bank: 1,241 –1.6%

HDFC Bank: 496 –1.3%

Hero Honda, on the other hand, gained 1.8% after the company reported profits that were better than analysts’ expectations. Backed by strong demand and volume growth the company posted a 13% rise in June quarter profits to 558 crore. Analysts were expecting the company to report a net profit of 540 crore. Cairn India and Siemens are the other notable gainers.

Hero Honda: 1,788 +1.8%

Cairn India: 320 +1.4%

Siemens: 928 +1.3%

At the sectoral level, consumer durables, real estate, banking and healthcare stocks led the losses on the BSE. Except information technology, all BSE sectoral indices closed the day in losses.

BSE Consumer Durables: 6,811 –2.20%

BSE Realty: 2,198 –1.43%

BSE Bankex: 12,638 –0.98%

BSE Healthcare: 6,341 –0.80%

Rising interest rates and concerns about the impact of a slowing economy on property sales led to selling in real estate stocks. Except three, all stocks in the BSE real estate index closed the day with losses.

Orbit Corporation: 42 –3.9%

Anant Raj Industries: 82 –3.2%

Indiabulls Real Estate: 117 –2.3%

Unitech: 35 –2.2%

Meanwhile, shares of Crisil, Petronet LNG and Mindtree surged on robust June quarter earnings. Ratings firm Crisil surged 9.4% and hit a new high of 7,889 after the company said its profits rose by one-third in June quarter. Petronet LNG hit a new of 167 after the company, on Wednesday, reported a 130% rise in June quarter profits. Mindtree also surged 10.6% on robust first quarter earnings.

Mindtree: 397 +10.69%

Crisil: 7,889 +9.4%

Petronet LNG: 167 +9.1%