At 11:05 am, Nifty50 index was down 0.87 per cent at 11,696. The index has fallen 3.5 per cent in the past week and was trading at its lowest level since Budget day i.e. February 1, 2020.
“Indian equity markets
correct for the fourth day running even as macro data showed January was an excellent month for growth in manufacturing sector with growth back in momentum. The fear of supply chain disruption and spread of Coronavirus gets priced into stocks as markets
fear global growth estimates to be cut sharply if problem continues. Nifty large caps under pressure as foreign investors sell against collateral risk globally,” IIFL Securities said in a note.
Among individual stocks, Hindalco Industries was the top loser in the list, down 17 per cent in the past one month on concerns of a possible weak March quarter earnings due to weaker prices and demand for the company's products.
ITC slipped 16 per cent during the period, on concerns of earnings growth due to demand slowdown. According to analysts, the tax increase in the Union Budget comes as a negative surprise and is likely to affect earnings growth in the near term. The deceleration in cigarette earnings before interest and tax (EBIT) growth along with the tax hike and continuing demand slowdown reduce the near-term growth visibility.
GAIL (India) has slid 15 per cent in the past one month, as weak crude and spot liquefied natural gas (LNG) prices remain an overhang on the company's earnings.
Analysts at JP Morgan cut the company’s FY20-21 EBITDA (Earnings before interest, tax, depreciation, and amortisation) estimates by 6 per cent. "While consensus EBITDA estimates for GAIL have seen around 25 per cent cut in the last 12 months, in our view there is still material risk to the downside, especially in a low crude, low spot LNG price environment," the brokerage firm said in a note with ‘neutral’ rating on the stock.
Additionally, on the government plans to split the company, media reports have talked about a cabinet note being moved to separate the pipeline business into a subsidiary. Overall, the operating and regulatory environment are uncertain for GAIL at this point and hence valuations while being attractive (v/s historical averages) alone do not make a compelling case, in our view, it said.