Street Signs: Mkt in steel price trap, Adani contagion fears hit LIC & more

Market in a ‘steel price trap’, status changes to ‘downtrend’

The fall in steel stock prices has altered the market trajectory to a ‘downtrend’. The National Stock Exchange Nifty has declined 514 points, or 2.84 per cent, in the past two trading sessions to close at 17,604. “We shifted the market status to a downtrend as the Nifty breached its recent correction low of 17,661. Many stocks continued to take on technical damage, with many moving deeper into their respective bases and breaking below the logical support levels,” read a note by MarketSmith India – an investment research platform. Analysts say if the Nifty fails to sustain above Friday’s low of 17,493 in the next few sessions, more selling could emerge.

White-knuckle ride for FPIs: Dump finance stocks

Stocks of financial services and information technology (IT) companies have accounted for most of the foreign portfolio investor (FPI) outflows during the first fortnight of this month. FPIs have net-sold shares worth Rs 15,067 crore until January 15. Of these, Rs 6,701 crore was yanked out from finance stocks, followed by Rs 3,457 crore worth of selling in IT and another Rs 2,824 crore worth of selling in oil and gas stocks. Conversely, FPIs bought shares worth Rs 2,518 crore in metals and Rs 390 crore in construction companies. Analysts observe that selling finance stocks is on account of profit-taking and growing unease about exposure to Adani Group. FPIs had accumulated finance stocks amidst rising credit growth and falling non-performing assets.

Adani contagion fears hit LIC: Shares crack

State-owned life insurer Life Insurance Corporation (LIC) of India’s stock is down close to 10 per cent year-to-date amid a sharp fall in shares of Adani Group. The carnage in Adani Group stocks over the past two trading sessions has seen the value of LIC’s holding in Adani stocks decline by Rs 18,645 crore. The insurer has also invested Rs 300 crore in Adani Enterprises’ follow-on public offer that is currently open. Market players say the shares of LIC, down 5 per cent in the past two sessions, could extend losses if Adani stocks continue to trade lower. In the event Adani stocks bounce back, LIC, too, could benefit.