Wednesday, 19 November 2008

News of shutdowns, output cuts sends stocks crashing

Stock prices of companies that have recently announced partial shut downs or production cuts at their manufacturing plants have taken a beating in the past two weeks.

As on Tuesday, the share prices of eight such companies have fallen between 14 and 45 per cent from November 3, the first trading day of this month.

Tata Metaliks Ltd – which announced a three-week shutdown of one of the units at its Kharagpur plant effective November 18, 2008, for repair – has declined by over 15 per cent during the above-indicated period.

Hardcastle & Waud Manufacturing Company, which halted its synthetic resins operations due to lack of orders, has fallen 45 per cent during the same period.

Automotive Axles is down by 21.83 per cent. The company has announced its manufacturing operations would be shut down for at least a week in November-December 2008.

The other companies that have announced production cut or shut downs include Ispat Industries, Mahindra & Mahindra, LG Balakrishnan & Brothers, Ashok Leyland and Tata Motors.

However, Cable Corporation of India, which announced plans to cut production due to slowdown in the economy on Tuesday during trading hours, ended on flat note at Rs 10.50. According to analysts, this announcement would help the company cut its losses.

GDP forecast lowered

The Indian economy may grow 6.7 per cent in the year ending March 2009, JPMorgan said, down from its earlier forecast of 7 per cent. The economy may grow 6.2 per cent in 2009-10, down from its previous estimate of 6.8 per cent, the bank said.

“The moderation in exports, small business output, and real estate related activity could crimp urban consumer spending as employment and household income growth slackens,” JPMorgan said in the note.

Other global financial groups such as Citigroup, Goldman Sachs, Morgan Stanley and Nomura have also lowered their estimates for India’s GDP growth over the past one month.

Source: TheHinduBusinessLine

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