Alert: Hindalco, Sterlite sink deeper, now at fresh lows

The outlook for domestic markets continues to remain cloudy as the Sensex fell below the 16,000 mark on Monday (26 September), but finally closed at 16,051. The weakness in Asian markets triggered by reports that Greece crisis may take longer than expected to be resolved, led to markets hitting their 1-month lows.

Also, concerns about a weak September 2011 quarterly numbers and the fact that FIIs sold shares worth Rs 1,279.61 crore on Friday adversely affected investor sentiment, making the markets much weaker. Even the CNX Nifty plunged to a 1-month low and closed at 4,835.4.

[caption id=“attachment_93376” align=“alignleft” width=“380” caption=“concerns about a weak September 2011 quarterly numbers and the fact that FIIs sold shares worth Rs 1,279.61 crore on Friday adversely affected investor sentiment, making the markets much weaker. Reuters”]  [/caption]

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This steep fall means a number of shares are near their 52-week lows. Firstpost did a quick analysis of CNX Nifty 50 stocks to check which scrips are trading close to their 1-year lows and which ones at their highs.

Of the sample, 72 percent of the stocks are close (<15%) to their 52-week lows. In other words, nearly three out of every four stocks are trading at their year’s low. This gives you an overall sense of the depth of weakness in the market.Some of the stocks that have touched new lows are profiled below.

Sterlite Industries and Hindalco scrips hit an all-time low on Monday as copper prices at the London Metal Exchange slid to their 1-year low due to mounting fears about a possible Greece default leading to a global recession.

Hindalco’s all-time low on Monday was marked by the stock tripping to Rs 124.5 per share - the previous 52-week low was Rs 128.2 per share (see table). Sterlite Industries too fell to new depths as its scrip tumbled to Rs 114.6 per share. It finally closed at Rs 117.1 per share. Overall weakness in international markets on non-ferrous commodities due to lower demand as a result of slowdown, has led to a bearish pattern in these shares.

It was an all-time low for Larsen & Toubro, too, which came down to Rs 1,410 per share. Concerns about the slow pace of execution and orderbook have taken a toll, which has triggered a downgrade of the company to ‘sell’ by brokerage firms like HSBC and MF Global.

While L&T is proxy to the India growth story, with capital expenditure and investments slowing, it will languish as 90 percent of its orderbooks are from the domestic space.

Metal and mining stocks like SAIL, Sesa Goa and Tata Steel also got a hammering which came perilously close to their 1-year lows. The slowdown in the construction and the automobile sector seems to be the main culprit for weakness in SAIL and Tata Steel. Sesa Goa scrip took a big hit due to concerns over revised earnings estimates by brokerage firms and the alleged Rs 8,000-crore iron-ore mining scam in Goa.

PSU stocks like GAIL, NTPC, ONGC and BHEL are no better either, which are trading at 1-year lows. BHEL came pretty close to its 52-week low as the scrip slid to Rs 1,575.5 during the day (26 Sep) vis-a-vis its 52-week low of Rs 1,573.05 per share. The lingering concerns about the follow-on public offer (FPO) have not been taken kindly as investors sold heavily the shares on the exchange. ONGC too fell to a low of Rs 253.25 per share (52-week low is Rs 248.05) owing to the government’s policy on oil subsidies. 

Higher interest rates and labour-related issues gave Maruti, India largest passenger car vehicle manufacturer, a big headache. The stock was trading near its 52-week close of Rs1,041.35 per share.