Sustained sell-off in the broader market: Over a fourth of stocks hit 52-week lows The sustained sell-off in the broader market has hammered many blue-chip stocks. More than a fourth of Nifty500 companies slipping to their 52-week lows last week as growing fears of recession triggered a sell-off across the globe. With central banks around the world moving toward aggressive policy tightening, investors chose to stay away from risky assets as sucking out liquidity from the system would stifle economic growth. As many as 142 stocks from the NSE500 universe tested their 52-week lows since June 13 as the Index plunged to its lowest levels since May 25, 2021. The index, which represents about 90% of the nation’s market capitalisation with almost 98% of the total turnover, has corrected 18.2% since October highs. The erosion in market value for these 142 stocks since October 18 stands at Rs 26.3 trillion, with TCS and HDFC Bank losing Rs 2.2 trillion and Rs 2.1 trillion, respectively. The list features marquee names from the information technology and metal space. Shares of top four IT firms – Tata Consultancy Services, Infosys, HCL Technologies and Wipro – plummeted to their 52-week lows on June 17. Among the metals pack, Tata Steel, Hindustan Zinc, Hindalco Industries and SAIL also slumped to their lowest levels in last one year. After last year’s stellar rally, the metal counters are melting sharply with the Nifty Metal Index correcting over 30% over the last two months. The Nifty Metal Index had gained as much as 70% in 2021 against Nifty50’s gain of 24.1% during the same period. While the fear of recession rattled the IT sector, stringent lockdowns in China due to its zero-Covid policy in Q2 of CY22 impacted metal counters. Kotak Institutional Equities argues that the current phase of the IT sector is intriguing where the attention has shifted towards recession scenarios even as current demand is extremely strong. The brokerage, which reduced its earnings targets for the sector, said, “We moderate our stance and bake in normalised global IT spending growth of 3-4% for CY2023E and 7% for CY2022E. We cut our FY2023-FY2025E revenue estimates by 2-10% for our coverage universe.”
The Japanese pharma major is also filing a plea before the Delhi HC seeking appointment of forensic auditors to analyse transactions involving IHH, Fortis Healthcare and RHT, Singapore, as directed by the HC on October 18.
The development is likely to create legal hurdles and delay the proposed open offer as IHH had recently told FE that it could only go ahead if Sebi agreed with its legal interpretation that the SC’s September 22 order has lifted all such restraints.
IHH managing director and CEO Kelvin Loh told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, legal observers told FE that the matter is not that straightforward and simple as the Delhi HC has to take the final call on the matter of open offer as well as whether a forensic audit has to be done in the share sale which was executed in 2018.
Also Read: IHH to float open offer for Fortis if Sebi concurs with our legal view: MD & CEO
Loh and Rajagopal had said the possibility that the matter may take a different turn when it comes up in Delhi HC cannot be ruled out.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
Daiichi has written to Sebi that the SC in its September 22 order had asked the HC to consider ordering a forensic audit into the dilution of FHL shareholding, repeated violation of undertakings and assurance by former FHL promoters — Malvinder and Shivinder Singh — and the transaction between FHL, IHH and the clandestine transfer of Rs 4,666 crore to RHT Singapore.
Daiichi is “severely prejudiced” with IHH’s clandestine attempt to subvert the status quo order directed by the SC on December 14, 2018, and September 22 with respect to the conduct of forensic audit and the pending proceedings before the HC by purportedly consulting regulatory authorities, including Sebi, on the proposed FHL-IHH transaction. It has reiterated that the FHL-IHH transaction was currently sub-judice before the HC where FHL is also a party, its solicitors, P&A Law Offices, have said in the letter.
“We further state that any such attempt by FHL and/or IHH to proceed with the FHH-IHH transaction would be in direct contravention of the HC and SC orders,” the letter sent by the law firm has stated. Daiichi Sankyo is pursuing the enforcement of Rs 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH on a contempt plea filed by the Japanese drugmaker against the Singh brothers.
The launched works involve rehabilitating the Galgamuwa Railway Station and upgrading the railway line from Maho to Anuradhapura, including additional tasks. Another project is the second phase of track rehabilitation from Maho to Omanthai (128 kms), funded by a $318 million Indian Line of Credit.
Transport Minister Gunawardena praised the efforts of Indian company IRCON in Sri Lanka and called for more cooperation in the railway sector. State Minister Shantha Bandara and officials from the Sri Lankan Ministry of Transport attended the event.
Railways is a priority for Indian assistance in Sri Lanka, with over $1 billion invested under five Indian Lines of Credit. IRCON has been involved in Sri Lanks since 2009. It has contributed to the modernisation of Sri Lanka Railways by reconstructing the entire railway line network in the Northern Province (253 Km) and upgradation of the Southern line (115 km), as well as improving safety through advanced signalling and telecommunication systems.
Despite Sri Lanka’s debt standstill in April 2022, India’s support under various Lines of Credit has continued.
(With PTI inputs)