Sensex falls 300 pts, Nifty below 8600; banks, L&T fall

10:30am Market Expert

The big challenge for the market near term is the weakness in corporate earnings, says Sandeep Bhatia, ED & Head of Sales, Kotak Institutional Equities.

In an interview Bhatia says market correction near term will be driven by concerns over earnings growth and not so much by election results.

He expects a pre-Budget rally, but does not see the market giving more than 10-12 percent returns over the next couple of quarters.

Bhatia is not expecting any major tax incentives from the government in this Budget, given the weak fiscal situation.

He says the government needs to do something quickly to stimulate growth as the capex cycle is still showing no signs of recovery.

10:00am Market ChecK

The market fell more than 1 percent in morning trade on fall in rupee post exit polls indicated that BJP may not get majority in Delhi elections. Banks, capital goods, auto and metals drag.

The Sensex dropped 338.46 points to 28379.45 and the Nifty fell 101.40 points to 8559.65. The BSE Midcap and Smallcap indices declined nearly a percent.

More than two shares advanced for every share declining on the Bombay Stock Exchange.

Shares of ICICI Bank, HDFC Bank, HDFC, ITC, Tata Motors, M&M and Hero Motocorp were down 1.5-2.5 percent. Larsen & Toubro dropped 2 percent ahead of Q3 earnings today. A poll expects muted earnings during the quarter with profit rising 1.1 percent and hydrocarbon business reporting losses.

Tata Power and Reliance Infrastructure lost 3-4.5 percent as AAP promised in its manifesto to reduce electricity bills by 50 percent.

Tata Steel shed 3 percent after their Indian and South East Asian operations had a weak quarter though European operationally showed improvement. Deutsche Bank maintains buy rating but cut FY15/16 earnings by 31 percent/24 percent and target price by 29 percent to Rs 480/share as India EBITDA per tonne is the lowest in 23 quarters and the steel price overhang persisted.

GAIL lost more than 4 percent as inventory losses weighed on Q3 earnings but siliver lining was that there was no subsidy paid in Q3. CLSA says GAIL is a conviction sell in Asian utility space with a target of Rs 360 as it is trading 35 percent above historical average PE and building USD 90 a barrel on Brent crude price.

Appollo Tyres tanked 15 percent as the stock reacted to weak earnings as its revenue fell 13 percent to Rs 3,104.8 crore while profit dropped 45 percent at Rs 184.2 crore. Results were also impacted by one time provision of Rs 79 crore on account of retrenchment expenses for South African business.