Mumbai: Investors dumped shares of mid and small cap companies amid a sell-off that intensified in realty firm HDIL. Dealers attributed the panic to a mix of negative news and disappointing quarterly numbers, causing investors to question the rich valuations most stocks are enjoying.
The gloom spilled over to frontline shares as well, with the Sensex closing at 19,923, down 102 points, and the Nifty shedding 35 points to close at 6019. Yet the decline in the Nifty and Sensex was much lower compared to the over 2 per cent fall in both the BSE Small and Midcap indices.
The day began on a somber note as sellers targeted Tata Motors following the profit margin warning at its luxury passenger vehicle arm JLR. Tata Motors was the biggest loser among large caps, falling around 6 per cent to close at Rs 293. Nifty component Jaiprakash Associates too fell close to 6 per cent to Rs 83 after the company had to defer a stake sale in its arm Jaypee Infratech because of an unexpected slide in the latter's stock price on Wednesday.
HDIL shares extended losses after the company's promoter sold around 50 lakh shares earlier this week to help fund a land acquisition by the company.
L&T third quarter numbers announced on Thursday were mixed. The company's net profit just about met analysts estimates, revenues were below expectations, while order flows were better than expected. The stock closed 1.6 per cent up, with brokers attributing the rise to short covering of positions more than anything.
HDIL shares ended 22 per cent down at Rs 75, even as the company tried to pacify the market saying the stake sale by its promoter earlier this week was to finance a parcel of land acquired in 2010-11. The stock has fallen around 37 per cent in the last three sessions as the market suspects the company is facing a serious financial problem. Not helping matters is that 98 per cent of the promoters' holdings are pledged with financiers, which could potentially be dumped in the market if the stock price weakens further. The weakness in HDIL slowly spread to other stocks in the sector. Realty shares were the worst performers with the BSE Realty index shedding over 4 per cent.
IVRCL shares fell 20 per cent as the family of the slain consultant working at a road project managed by an IVRCL arm has alleged that he may have stumbled upon some irregularities and so may have been murdered. In the past, shares of IRB Infra had fallen sharply on allegations that the promoters may have been involved in the murder of an RTI activist.
Weak third quarter numbers from Andhra Bank and Prism Cement also contributed to the gloomy outlook for second and third line shares. Hexaware Tech, DB Realty, Sintex Industries, Anant Raj, IRB Infra, Jain Irrigation, Gujarat Flourochemicals, Puravankara Projects, Punj Lloyd and Andhra Bank were among the big losers, shedding 6-10 per cent.