Sensex on Negative Bias, Tata Firms Losers after Mistry

Indian shares slumped on Tuesday. They were dragged down by stocks of Tata Group firms after Cyrus Mistry was ousted as chairman of salt-to-software multinational Tata Sons, in a move which caught markets by surprise. Tata Sons, a large shareholder in a string of listed Tata Group firms, announced late on Monday all of a sudden that Ratan Tata would replace Cyrus Mistry as chairman in the interim. While the Tata Sons’ board gave no detailed reason as to why the change was taking place, some media reports said that there had been discontent with some of Mistry’s actions, encompassing asset sales.

Mr Cyrus Mistry’s surprise removal four years after he had become the very first Chairman of Tata and Sons who doesn’t belong to the Tata group’s founding family has culminated in nasty whispers from both the sides about his removal from the ‘103 billion dollar’ group which owns companies in close to 100 countries. In words that indicates the level of bad blood and distrust that had built up against Cyrus Mistry over months, sources said, who are close to Mr. Tata, the patriarch of the group’s founding family.

Among the Tata Group firms, Tata Steel was the top percentage loser on the broader National Stock Exchange – NSE Nifty, shedding 2.7 per cent, while others like Tata Power, Tata Consultancy Services (TCS) and Tata Motors also dropped between 1 per cent and 2 per cent.

A market analyst said that investors were basically exercising caution because of the uncertainty surrounding the sacking. They were mostly seeing short-term trading on the Tata stocks as traders were looking to book profit due to the situation, he added. However, he concluded that this was not likely to sustain for a long period of time.

Sentiment was also cautious before the quarterly results of heavyweights like HDFC Bank and Kotak Mahindra Bank, scheduled later in the day. The stocks of the 2 banks slumped between 0.5 per cent and 1 per cent.

The broader Nifty 50 index was down 0.2 per cent at 8,683.05 as of 2:50 p.m., while the benchmark BSE Sensex was trading 0.3 per cent lower at 28,096.

Idea Cellular Ltd, India’s third largest telecom operator, slumped as much as 3.6 per cent after reporting an 88 per cent fall in September-quarter (Q2) profit on Monday.

However, Bharti Infratel rose as much as 3 per cent after the telecom tower infrastructure provider registered a 21 per cent rise in net profit during the September quarter (Q2).