At 9:58 am, the S&P BSE Sensex dropped by 688.03 points to 71,976.44, with the NSE Nifty50 down by 195.40 points, trading at 21,859.80.
Stock market indices plunged amidst volatility, with Tata Motors declines shares declining sharply. The S&P BSE Sensex dropped 688.03 points, while the NSE Nifty50 fell 195.40 points. Nifty Auto and Nifty Oil & Gas each witnessed a decline of over 2%.
Benchmark stock market indices sharply declined on Monday due to increased volatility and Tata Motors declines shares sliding. The S&P BSE Sensex dropped 688.03 points to 71,976.44 at 9:58 am, with the NSE Nifty50 falling 195.40 points to trade at 21,859.80. Other broader market indices faced pressure in early trade due to rising volatility.
Nifty Auto and Nifty Oil & Gas, the largest decliners among sectoral indices, both dropped over 2%. High-weightage indices like Nifty Bank, Nifty Financial Services, and Nifty IT also experienced significant declines in the session.
Market Highlights: Tata Motors Declines
Cipla, HDFC Life, Asian Paints, Sun Pharma, and Eicher Motors emerged as the session’s top gainers. Conversely, Tata Motors, BPCL, Coal India, ONGC, and Hero MotoCorp faced the most significant losses. Tata Motors declines shares plummeted in early trade following a subdued forecast from its luxury division, Jaguar Land Rover (JLR).
On Friday, Tata Motors declines projected that Jaguar Land Rover’s (JLR) margins on earnings before interest and taxes in FY25 would remain at levels similar to the preceding year. This announcement led to shares plunging by up to 7%.
Brokerages downgraded the stock due to the development. Nomura analysts stated, “JLR may face demand uncertainties,” subsequently downgrading the stock from “buy” to “neutral” post-results. Concurrently, pharmaceutical firm Cipla surged nearly 6% after projecting robust margins in its fourth-quarter results.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, remarked, “Pre-election concerns persist amidst a rise in the India VIX. Options data indicates Nifty’s trading range at 21,700-22,500, with significant resistance at 22,500 and support at 21,800.”
He further mentioned, “Key catalysts this week include Jerome Powell’s speech, US CPI data, and fourth-quarter results from leading Indian firms.” It’s worth noting that investors are also anticipating domestic inflation data later today.
JM Financial maintains a BUY rating on Tata Motors, valuing the standalone business and JLR at 12x and 3.0x EV/EBITDA respectively, with a March 2025 sum-of-the-parts (SOTP) valuation of Rs 1,200. However, the report underscores the slowdown in key global markets as a point of monitoring.
In the fourth quarter of FY24, Jaguar Land Rover (JLR) reported an EBITDA of 16.3%, reflecting a 170 basis points year-on-year improvement driven by higher operating leverage and lower raw material costs, according to a report by JM Financials on Tata Motors declines by 8%.
Meanwhile, the India business, comprising commercial vehicles (CV) and passenger vehicles (PV), achieved an EBITDA of 10.5%, exceeding JM Financials’ expectations by 50 basis points. JLR reduced its order backlog to around 133,000 units with the aid of supply normalization.
While the US market remains strong, demand in the EU has decelerated. Management intends to augment marketing expenditures to enhance JLR’s order book. The EBIT margin is projected to remain unchanged for FY25.
The company anticipates robust free cash flow generation to back investments in JLR’s electrification initiatives, targeting a net cash position by FY25 (£0.7bn currently).
In the domestic PV segment, growth is projected to be fueled by new releases and capacity expansion. Moreover, domestic CV demand is predicted to rise from Q2. Enhanced margins in both domestic CV and PV segments are seen favorably, with the net cash position in the Indian auto business offering assurance.
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