Sensex retreats, closes 159 points down; Reliance, Bharti drag
29 Nov 2011
The Sensex closed with 1% loss on Tuesday, weighed down by heavyweights Reliance Industries and Bharti Airtel. Among others, banks, realty and metal stocks added pressure on the market in the second half of trade. The Sensex was down 158.79 points at 16,008.34, which had rallied over 470 points yesterday. The Nifty tested an intra-day low of 4787.10, before closing down 46.20 points at 4,805.10.
Nitin Rakesh, chief executive officer of Motilal Oswal Asset Management Company says, while the market is looking at the gyrations of the world, the fact of the matter is that India still has a bunch of issues to work through domestically.
He has a slightly lower downside bias. ''Till such time that we get a slightly clearer picture on things like interest rates, inflation and reform measures, I think we will continue to work through these limited moves in the prices.''
Index heavyweight Reliance Industries was down 2.5% after sources claimed that government may opt to hold on to inducting BP (which signed USD 7.2 billion deal with RIL for 30% stake in 21 coal blocks) as co-owner in KG-D6. Sources also say, BP's role will be uncertain till it becomes co-owner in KG-D6 basin and arbitration complete. Arbitration is likely to take at least 1-2 years.
Shares of Bharti Airtel tumbled 3.8% after Edelweiss report. The company strongly opposed Edelweiss' analysis of its annual report. The brokerage firm had highlighted telecom major's significant exposure to USD loans due to the Zain acquisition in 2010. According to the report, if steep fall in INR sustains and the rupee cash flows are used to service debt, it will lead to higher cash outflow of Rs 4,200 crore.
The Edelweiss report also said that Bharti Airtel acquired 100% stake in Zain for Rs 42,190 crore, on which goodwill of Rs 34,470 crore has been recognised. According to the company, the management has no concern on goodwill impairment in African business. ''Impairment, if any, is routed via P&L as per accounting policy.''
