Sensex posts biggest weekly decline in 7 months, Tata Steel slumps 6%1 min read . Updated: 10 May 2019, 04:39 PM IST
- Frontline IT stocks TCS and HCL Tech fell sharply today
- Tata Steel, which slumped 6%, led losses in metal stocks
Indian markets fell today, extending losses to the eighth day, led by losses in metal and IT stocks. The US today hiked tariffs on more than $200 billion in goods from China, deepening a conflict that has roiled financial markets and cast a shadow over the global economy. However, global markets showed some signs of recovery on hopes that the two countries can still reach an agreement. The Sensex ended 96 points lower at 37,462 while Nifty settled at 11,278, down 0.20%. For the week, BSE Sensex dropped 3.9%, worst weekly decline since the week ended October 5, 2018.
Sanjeev Zarbade, VP PCG Research at Kotak Securities, said: "Indian markets saw sharp selling as fear of US-China trade war resurfaced. This apart markets also sold off due to weak set of earnings in the ongoing 4QFY19 results season."
"We have started to see signs of slowdown in the economy, going by management commentary of consumer companies. If the slowdown gains traction, there may be further earnings downgrades in more sectors. Investors are also wary of taking aggressive positions before the general elections results to be announced on 23 May," he said.
Tata Steel, which slumped 6%, led losses in metal stocks. German industrial conglomerate Thyssenkrupp said Friday it had abandoned plans to merge its steel business in Europe with Tata Steel because of expected resistance from the European Commission. "Thyssenkrupp and Tata Steel expect that the planned joint venture of their European steel activities will not go ahead due to the Commission's continuing concerns," the German company said in a statement.
Hindalco, Hindustan Zinc, Vedanta and NMDC were among the other losers, falling over 1%.
Among IT stocks, HCL Technologies fell 4.3% while TCS declined 2%. HCL Tech shares fell today despite the IT company maintaining its growth momentum of recent quarters, reporting 3.3% sequential revenue growth in constant currency terms for the March quarter. It also guided for 14-16% in constant currency growth for FY20.
Many brokerages still remain positive on HCL Tech shares. "HCL Technologies’ revenue beat expectation. Management has guided for organic growth of 7-9% in FY20, while acquisitions will add 7%. It trimmed FY20 operating margin guidance to 18.5-19.5% from 19.5-20.5% in FY19, citing investments in the digital business. We believe, capability-led acquisitions will help HCL Tech maintain traction in organic revenue growth," said domestic brokerage Edelweiss, which maintains buy on the stock with target price of ₹1,300.
SBI, which rose 2.5%, led gains in the banking stocks. Though the state-run bank's net profit was significantly below the Street's estimates due to a surge in provisions, it reported a good quarter operationally, with fresh slippages falling sharply and asset quality improving.
Asian Paints shares fell 1% after the company on Thursday reported a dull performance in the March quarter. Consolidated net profit at ₹473 crore fell 1.6% year-on-year, lower than Bloomberg’s consensus estimate of ₹587 crore. (With Agency Inputs)
Welspun Corp Ltd, the flagship firm of the Welspun Group, Friday said its board will meet next week to consider buyback of shares. A board meeting of the company will be held on May 14, 2019 "to consider proposal to buyback the fully paid-up equity shares of the company of face value of ₹5 each," Welspun Corp said in a BSE filing. Shares were up 2.5% at ₹143 in noon trade.
Shares of Voltas traded flat after paring most of its early losses. Shares of the AC manufacturer fell as much as 6.3% to ₹537, its biggest percentage loss since October 2018, after the company's March-quarter consolidated profit fell 27%. But Nomura remains sanguine on the revival in the unitary cooling products business and sustainability of a turnaround in the electro-mechanical project business. Nomura is "neutral" on Voltas and maintains a target price at ₹655.
US President Donald Trump's tariff increase to 25% on $200 billion worth of Chinese goods took effect on Friday, ratcheting up tensions between the United States and China as they pursue last-ditch talks to try to salvage a trade deal.
HCL Technologies Ltd maintained its growth momentum of recent quarters, reporting 3.3% sequential revenue growth in constant currency terms for the March quarter.
It also guided for 14-16% in constant currency growth for FY20. This is higher than 11.8% constant currency growth the company saw in FY19. (Read: HCL Tech keeps up the growth pace, margins remain a bugbear)
Public sector lender State Bank of India (SBI) is expected to report a profit of ₹4,840.8 crore in the March quarter of FY19, as compared to a net loss of ₹7,718 crore in the same period last year, according to a Bloomberg estimate of 19 analysts.
SBI had reported its biggest-ever quarterly loss on higher provisions in Q4 last year. It had reported a net loss of ₹7,718 crore for the quarter ended 31 March, the second highest quarterly loss reported by an Indian bank.