Sensex drops 0.8%; Tata Motors jumps, Bharti down
Weak world equities dragged Sensex 0.8 per cent lower on Wednesday, but Tata Motors' rally on upbeat assessment by brokerages a day after its forecast-beating quarterly results contained losses.business Updated: Aug 11, 2010 17:18 IST
Weak world equities dragged Sensex 0.8 per cent lower on Wednesday, but Tata Motors' rally on upbeat assessment by brokerages a day after its forecast-beating quarterly results contained losses.
Vehicles maker Tata Motors, which also makes the ultra-cheap car Nano, rose as much as 6.9 per cent to 1,023.55 rupees, the most in at least two decades, data from Thomson Reuters showed.
Edelweiss raised Tata Motors to "buy" from "reduce", while Citi Investments Research raised the target price on the stock to 1,197 rupees from 947 rupees per share.
Bank of America-Merrill Lynch raised its price objective on Tata Motors to 1,100 rupees from 924 rupees, while reiterating a buy rating, a note seen by Reuters showed.
The 30-share BSE index shed 0.82 per cent or 149.80 points to 18,070.19, with 24 of its components losing ground.
"Tata Motors saved the markets from a steep fall today. But, the stock has run up a lot after the earnings upgrades from brokerages," said Vaibhav Sanghavi, director of Ambit Capital.
"The scene globally is not going to improve overnight. It is going to be a gradual process and stimulus has to be kept on."
Foreign funds have invested a net $11.2 billion in Indian equities so far this year, including in the primary market, having pumped in a record $17.5 billion in 2009, which drove the benchmark index 81 per cent higher.
"India is in a sweet spot currently, with the economic growth and reforms. So, there is no danger of a steep downside," Sanghavi added.
Shares in Bharti Airtel, India's top mobile operator, dropped 1.4 per cent after see-sawing as it reported a 32 per cent fall in quarterly profit, including its African operations which it acquired in June in a $9 billion deal.
"It will be some more time until more clarity emerges (for the telecoms sector). Telecom stocks are best avoided at this point in time," said Sanghavi.
Financials led the losses, hurt by weak broader market, dealers said.
Top lender State Bank of India dropped 1.1 per cent while leading private lenders ICICI Bank and HDFC Bank shed 1.8 per cent and 0.6 per cent respectively.
Mortgage lender Housing Development Finance Corp declined 2.4 per cent.
Aluminium maker Hindalco rose 0.3 per cent as its unit Novelic Inc NVLX.UL said on Tuesday it sees current strong demand for flat-rolled aluminum products continuing into its fiscal second quarter and beyond.
Tata Steel, world's seventh-largest steelmaker by output, dropped 3.2 per cent ahead of its quarterly earnings announcement on Thursday.
Cigarette-to-hotel business ITC was down 1.5 per cent after the recent rise in the stock. The stock has risen more than 23 per cent so far in 2010, riding on the domestic consumption story.
In the broader market, losers outnumbered gainers in a ratio of 1.5:1 in a relatively moderate volume of 450 million shares.
The 50-share NSE index declined 0.7 per cent to 5,420.60 points.
World stocks hit a 1-½ week trough after the Federal Reserve's assessment of the U.S. economy turned more pessimistic.
The MSCI world equity index was down 0.9 per cent at 1046 GMT while the Thomson Reuters global stock index shed 1.2 per cent.