Shares of commodity-linked firms were among the top losers during Thursday’s trading session where benchmark indices declined close to 3.4%. The NSE Energy Index lost close to 4% as shares of oil & gas and metal companies declined in the range of 1.5-6%, Bloomberg data showed.
Hindustan Petroleum Corporation (HPCL) was the biggest loser in the index as its shares dived close to 5.5% during the session. Shares of the state-owned oil company have declined more than 18% since the beginning of the current calendar. Shares of Oil and Natural Gas Corporation (ONGC) lost 4.85% on Thursday. ONGC had declared its earnings for quarter ending December on Thursday post market hours. Shares of GAIL lost 3.85% during the session taking its year-to-day fall to 11.4%. London based investment banking firm HSBC said in a note to investors that sectoral overhang is dragging GAIL.” The combination of falling domestic production of natural gas, overcapacity in its transmission system, and poor profitability of its gas based petrochemical division has resulted in muted earnings,” HSBC said in the report.
Metal companies lost in the range of 2%-7% on Thursday as the NSE Metal Index closed 4.39% lower. Shares of Tata Steel fell 4.52% during the session. The third quarter earnings of the steel company were below the street expectations. Tata Steel reported a consolidated net loss of `2,127 crore for Q3FY16 against profit of ` 157 crore in the same quarter year ago. Domestic Brokerage Motilal Oswal said in a research report that Tata Steel continues to suffer from sharp fall in realisations as its margins in Indian arm fell to the lowest since FY03.” While we bake in some margin expansion on operating leverage and price increase, it will not be enough to alter the long-term trend. Europe business will continue to suffer from onslaught of imports and uneconomical operation due to high labor cost. South-east remains vulnerable to Chinese imports and is operating at wafer-thin margins,” the brokerage said.
Thursday’s fall in equity markets had an impact on even defensives stocks like IT and pharma as the sectoral index for IT and Pharma in the NSE lost 2.71% and 2.3% respectively. Among IT stocks, shares of Infosys closed 2.6% lower while shares of TCS lost 3.26%. In pharma, Markans Pharma was the biggest loser as its shares fell close to 10%. Shares of Sun Pharmaceuticals lost nearly 3% while shares of Lupin fell 3.73%.