State Bank of India (SBI), Larsen & Toubro (L&T) and Bharat Heavy Electricals Limited (BHEL) were three companies from the 30 share S&P BSE Sensex which touched their respective 52-week lows as the market recorded biggest single day fall in four months.
The S&P BSE Sensex tumbled 2.05% or 534 points to close at 25,627, its sharpest single day fall since September 22, 2015, due to the weak Chinese manufacturing data. The Nifty50 plunged 171 points to end at 7,793.
Also, the economic data from the domestic front fuelled the fall. Manufacturing activity in India saw a contraction in December, for the first time in more than two years, with Nikkei’s Manufacturing Purchasing Managers’ Index (PMI) falling to a 28-month low of 49.1, against 50.3 in November.
A PMI reading below 50 indicates a contraction, while one above that level implies expansion. CLICK HERE TO READ FULL REPORT.
Besides SBI, Canara Bank, Punjab National Bank (PNB) and Indian Bank from the banking sector hit 52-week lows. Most of the banking stocks were down between 2%-5%. The National Stock Exchange (NSE), Nifty PSU Bank index closed at its 52-week level, was down 3.5% at 2,807 points.
According to Religare Institutional Research, analysis of 10 out of 15 strategic debt restructuring (SDR) cases suggests that this scheme is in no way a cure-all for Indian banks’ deteriorating asset health, instead it exacerbates the risk by deferring an estimated Rs 1.5 trillion (US$ 23bn) of NPA formation (30-40 accounts or 2.2% of total credit) from FY16/FY17 to later years. The brokering firm expects many SDR cases to fail, resulting in high and chunky slippages in FY17/FY18.
The two capital goods company - BHEL (down 3.5% at Rs 165) and L&T (down 2.5% at Rs 1,255) - were down more than 2% each on concerns of poor financial performance for the quarter ended December 2015 (Q3FY16).
Post Q2 (July-September) quarter results, shares of L&T and BHEL corrected by nearly 15% each as compared to a decline of less than 3% in the benchmark index.
BHEL reported a net loss of Rs 205 crore Q2FY16 against a profit of Rs 125 crore. L&T posted 14% year on year jump in net profit of Rs 1,118 crore mainly on account of one-time gain of Rs 546 crore due gain on divestment of part stake in a subsidiary company and stake in an associate company. L&T management had lowered its order inflow growth guidance for FY2016 from the earlier 15% to 5-7%.