Broad Strokes, September 30, 2024

Market Carnage: Sensex Plummets, Bonus Share Proposals, and Metal Stocks Shine Amid Global Uncertainty

Sensex crashes over 1,200 points

On September 30, Indian stock markets faced a significant downturn, with the Sensex plummeting over 1,200 points and the Nifty sinking below the critical 26,000 mark. This decline was primarily caused by profit-taking after a recent rally, along with mixed global cues. Additionally, rising geopolitical tensions in the Middle East heightened investor caution ahead of key U.S. economic data and Federal Reserve Chair Jerome Powell’s speech. As a result, all but one sectoral index fell, particularly affecting banking, energy, and auto stocks. Meanwhile, the Nifty Metal index rose for the eighth consecutive session due to increasing iron ore prices and positive sentiment from China’s economic stimulus efforts. Consequently, the India VIX, a measure of market volatility, surged nearly 9%, reflecting heightened investor anxiety.

Bajaj Steel and Shakti Pumps consider bonus share proposals

Bajaj Steel Industries and Shakti Pumps are experiencing significant boosts in stock performance as they consider bonus share proposals. Bajaj Steel’s shares surged 18% to a record high of ₹2,978, marking a remarkable 103% increase over the past four months, primarily driven by anticipation of a maiden bonus issue to be discussed in a board meeting on October 3, 2024. Similarly, Shakti Pumps’ stock hit the upper circuit limit of 5% after announcing a proposed 5:1 bonus issue, with shares trading at ₹4,295.45, reflecting a staggering 400% rise over the past year.

Metal stocks rise on China stimulus

Metal stocks experienced a significant rally, with the NSE Nifty Metal index gaining over 1% due to positive sentiment following China’s stimulus measures aimed at reviving its economy. The People’s Bank of China announced reductions in mortgage rates, which are expected to boost demand in the real estate sector, subsequently benefiting metal producers. As a result, key players such as Hindalco, Tata Steel, and JSW Steel saw notable price increases. Analysts recommend Hindalco for short-term trading due to its bullish technical indicators, suggesting an upside potential of nearly 10%.

Biocon and pharma stocks face USFDA scrutiny

Biocon, Aurobindo Pharma, and Lupin are facing scrutiny from the U.S. Food and Drug Administration (USFDA), leading to notable declines in their stock prices. Biocon’s shares fell 2% after the FDA issued four observations following an inspection of its Bengaluru API facility. In turn, Aurobindo Pharma’s stock dropped 4.5% after its subsidiary received ten procedural observations from the FDA for its Telangana facility, leading analysts to predict further downside. Similarly, Lupin’s shares fell over 2% after receiving three observations for its Pithampur unit, overshadowing recent positive developments and affecting investor sentiment.

Welspun Corp and Tata Steel show bullish trends

Welspun Corp’s shares surged to an all-time high of ₹768.95 after securing a significant order worth ₹1,348 crore for the supply of Coated LSAW Pipes and Bends in the Middle East. This positive news contributed to a 3.92% increase in its stock price, reflecting a remarkable 95% increase over the past year. Meanwhile, Tata Steel shares climbed 2.22% to ₹170.20, marking a seven-session rally. Analysts remain optimistic about both stocks, with price targets set for Tata Steel at ₹175-188.

Paras Defence secures significant order

Shares of Paras Defence and Space Technologies surged by 5% to ₹1,119 following the announcement of a significant order worth approximately ₹293 crore from its associate company, Controp-Paras Technologies. This order is expected to be executed over the next 47 months, contributing to an 81% increase in Paras Defence’s stock over the past six months, significantly outperforming the BSE Sensex, which rose by 14.83% during the same period.

Trading patterns and stock updates

In recent trading sessions, NMDC and Dalmia Bharat exhibited a long buildup, indicating bullish sentiment as their stock prices rose by 4.64% and 2.53%, respectively, alongside increased open interest and trading volumes. Conversely, Trent and Mahindra & Mahindra (M&M) experienced a short buildup, with stock price declines of 2.67% and 2.64%, suggesting bearish expectations among traders. Several stocks achieved positive breakouts by closing above their 200-day moving averages, signaling potential upward trends.

Ola Electric shares decline

Ola Electric shares fell over 4% to trade below ₹100 for the first time since its listing, marking a 36.3% decline from its record high of ₹157.53 in August 2024. The decline was primarily attributed to a 34% drop in sales reported for August. In response to service-related issues, Ola Electric announced plans to double its service centers to 1,000 by December 2024, aiming to improve customer service amid declining stock performance.