Tata Motors lost 3.6% at Rs 440.35 and Tata Steel shares 3.6% at Rs 322.90 at 12:40 IST on BSE on concerns over the 23 June 2016 referendum that could see Britain exit the European Union.
Recent polls have suggested that momentum is growing for the Britain's campaign to leave the bloc. The Organization for Economic Cooperation and Development (OECD) has warned that Britain's leaving the EU -- the so-called Brexit -- could send shocks through global financial markets. The OECD said on 1 June 2016 that a United Kingdom vote to leave the European Union (EU) would trigger negative economic effects on the UK, other European countries and the rest of the world. Brexit would lead to economic uncertainty and hinder trade growth, with global effects being even stronger if the British withdrawal from the EU triggers volatility in financial markets, the OECD said. By 2030, post-Brexit UK GDP could be over 5% lower than if the country remained in the European Union, the OECD said.Shares of Tata Motors have dropped 5.64% from its close of Rs 466.70 on 9 June 2016. The Tata Steel stock has lost 5.59% from its close of Rs 342.05 on 9 June 2016. Stocks across the globe have fallen over the past two trading sessions on Brexit fears.
Both Tata Steel and Tata Motors have large operations in UK and Europe. Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe. Tata Steel Europe has initiated the process to sell its UK business viz. Tata Steel UK. Tata Steel Europe has invited seven short listed potential investors to submit binding bids for Tata Steel UK.
Tata Motors derives majority of its revenue from its British luxury car unit Jaguar Land Rover (JLR). JLR is the largest automotive manufacturer in Britain. It is one of the UK's largest exporters and generates over 80% of its revenue from exports.
Meanwhile, another trigger for the fall in the Tata Steel counter was downgrade of the stock from a foreign brokerage to "sell" from "neutral" citing expensive valuations. The brokerage has reported said in a research note that fall in steel prices in Europe would further weigh on Tata Steel counter. The brokerage has reportedly said that the Tata Steel stock is currently pricing in most of the potentially positive drivers such as higher profitability and sale of UK assets.
Powered by Capital Market - Live News
