BSE 500 index hits 52-week low

The S&P BSE 500 index hit a 52-week low of 13,810, down 1.7% on the BSE after a sharp decline in market price of state-owned oil & gas, infrastructure, aviation and consumption sector stocks. The index has fallen below its earlier low of 13,812 touched on October 6, 2017, in intra-day trade.

The S&P BSE 500 index accounts 94% of the total market capitalisation of BSE listed companies. It has fallen 13% from its all-time high level of 15,938 touched on September 3, 2018, in intra-day trade.

Shares of state-owned oil & gas companies, including oil marketing companies (OMCs), are reeling under pressure falling by up to 29% on the BSE in intra-day deals, extending their previous day’s fall after the government, on Thursday, asked the them to absorb a Re 1 a litre cut in excise duty on petrol and diesel. The government also cut the excise duty on petroleum products by Rs 1.50 a litre with immediate effect. This is the first time in over four years that prices of either petrol or diesel are being controlled.

Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) have skid in the range of 16% to 25% on the BSE. Oil and Natural Gas Corporation (ONGC), Oil India and Gail (India) and Gail (India) down between 10% and 15%.

“While the move is certainly benign for the consumer, the modality of the same has negative fallout for the OMCs. As if the covert price control (during elections) was not enough to dampen the investor sentiments, re-introduction of under-recovery, in our view, could further dent investment environment,” according to analysts at Antique Stock Broking.

Shares of airline companies like InterGlobe Aviation (IndiGo), SpiceJet and Jet Airways fell in the range of 4% to 7%. In past one month, these three stocks were down between 11% and 31%, as compared to the 9% decline in the S&P BSE Sensex.

Analysts believe aviation firms will continue to face pressure from the twin impact of rising crude oil prices, as well as depreciation of the rupee.

Hetal Gandhi, Director, CRISIL Research said, “Apart from fuel-side pressures, the fall in the rupee-dollar exchange rate has made matters worse for the industry. For the first half of this fiscal, the rupee has plunged 9% on the year against the dollar, compared with the same period last year”.

“Operational profitability was under the pump in the first and second quarters due to low fares. But despite any fare rise, operating margins would likely be in the red this fiscal compared with 9-10% estimated for last fiscal,” the rating agency said in a press release.

Shankara Building Products, Oberoi Realty, Emami, Kansai Nerolac, Century Plyboards, Ashoka Buildcon, United Breweries, Radico Khaitan and Mahindra & Mahindra from the S&P BSE 500 index were down more than 5%.

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