Shares of Indian companies with significant exposure in Europe slumped on Monday, with Greece staring at the prospects of debt repayment default and imposing capital controls as the crisis deepens.
Shares of Cox & Kings plunged as much as 12% in intra-day on the BSE. The Mumbai-based travel organiser generates about 65% of Ebitda from UK travel and education business, analysts said. Trading activity on BSE and NSE rose over two fold against its 30-day average volume of about three lakh shares, Bloomberg data showed. Experts observe that the current Greece situation as negative primarily due to translational impact.
A weaker euro will also impact both Bharat Forge and Motherson Sumi Systems’ financials. Bharat Forge draws about one-fourth of its revenue from Europe while Motherson Sumi earns about 75-80% revenues from its Europe based subsidiaries.
Major sell off was also seen in the counters of IT and healthcare counters as the revenue of these firms largely come through export income. While the BSE IT index closed 1.7% lower, the healthcare index of BSE dropped 1.23%.
HCL Technologies which generates 33% direct revenues from Europe, fell 4% during the day trade before ending the session with 3% down at Rs 931.20.
“Weekend announcement of Referendum has created uncertainty,” said Nilesh Shah, MD, Kotak AMC. “The Street is more worried about the contagion effect on other countries like Portugal, Spain and Italy. From India’s point of view, our markets are likely to face lower volatility than peers. Certain stocks in IT, pharma and auto anciliaries having significant exposure to euro will underperform the market. Since Greece issue is well known for some time, it is unlikely to cause as much correction as the 2008 crisis,” Shah added.