Thursday, March 12, 2009

Closing Bell 12-03-09

Auto drives markets uphill
Selling activity at higher levels led the indices to shed a part of their gains during the final hour of trade. However, the markets ended the day well above the dotted line. The Sensex closed higher by around 180 points, while the Nifty closed higher by around 30 points. Stocks from the mid-cap and small-cap indices ended the day on a firm note as well. Buying activity was witnessed in stocks across sectors with stocks from the auto and banking space being the key gainers.

Most other Asian markets closed on a weak note. The European indices are currently trading in the red. Rupee was trading at 51.79 against the US dollar at the time of writing.

The inflation numbers as measured by the wholesale price index fell to 2.43% for the week ending February 28. This is lower by 0.6% as against 3.03% recorded a week ago. During the corresponding quarter in the previous year, inflation stood at 6.21%. Inflation numbers during the week declined mainly on account of lower prices of food items and manufactured goods.

Industrial production declined by 0.5% YoY in January 2009 as against a 6.2% YoY growth in the corresponding period in the previous year. This was mainly on account of decline in the manufacturing and mining output by 0.8% YoY and 0.4% YoY respectively. However, the output for capital goods, consumer durables and consumer goods grew by 15.4% YoY, 2.5% YoY and 1.1% YoY respectively.

Telecom stocks ended the day on a mixed note with Reliance Communication and Tata Communications ending firm and Bharti Airtel and Idea Cellular leading the pack of losers. The stock of Bharti Airtel was the top loser on the BSE Sensex today. The reason behind the same was on account of its CEO, Mr. Manoj Kohli selling his entire stake in the company. Mr. Kohli has sold nearly 123,000 shares over the last week. However, he stated that the stake sell was for personal reasons. As per a leading business daily, the Mr. Kohli will continue to remain the CEO and joint MD of the company. It may be noted that 123,000 shares amount to only 0.006% of the total shares outstanding.

Hotel stocks ended the day on a weak note led by Indian Hotels, Taj GVK and Hotel Leelaventure. As per a leading business daily, premium hotel chains across the country have reduced the room rates by 15%. It is believed that room rates are currently lower by 30% YoY to 35% YoY as compared to a year ago, while average occupancy rates are in levels of 65% to 70% as against 85% recorded last year. It may be noted that following the economic downturn and the terrorist attacks, hotel chains reduced the room rates during the months of December and January, which are otherwise considered to be peak season for the hospitality sector. As such, business post March tends to stagnate. With the end of peak season, hotels chains may further reduce the room rates to maintain higher occupancy rates. This in turn could impact their margins.

ITC flexing its muscles, stock up

The Indian markets continued to trade in the green on account of persistent buying among the index heavyweights during the previous two trading hours. Stocks from the FMCG, IT and auto sectors are leading the pack of gainers. However, select stocks from the power and telecom sectors are trading weak. The overall advance to decline ratio is poised at 1.2 to 1 on the BSE.

The BSE Sensex and the NSE Nifty are trading higher, up by around 170 points and 40 points respectively. The BSE Midcap and Smallcap indices are also trading higher, up by 0.4% each. The rupee is trading at 51.70 to the dollar.

FMCG major ITC is targeting a 20% YoY growth for its Wills Lifestyle brand during FY10. The company plans to incorporate a slew of measures that include a renewed focus on the product line, loyalty programmes and increase in the transaction size. ITC will offer wider offerings with a shorter product lifecycle of 6 to 8 weeks compared to its existing 3 to 4 months. The company also plans to open 10 new stores during FY10. It may be noted that the company’s premium brands have been less affected by the economic slowdown as compared to its mid-market brands. This development is in line with the company’s objective of increasing its revenues from its non-tobacco business. The stock is currently trading in the positive.

Auto stocks are trading firm led by Maruti Suzuki and Ashok Leyland. As per a leading business daily, Ashok Leyland has increased the working days at its 6 manufacturing plants to 5 days per week. It may be noted that the company has slashed its production levels and had been operating on a 3 days per week basis since November 2008 due to demand slowdown. The move comes after the company has reported a 33% sequential growth in sales during February this year. Further, the company has secured a Rs 11.9 bn contract from the Delhi Transportation Corporation and an order from the Angolan government for supplying 1,000 buses.

Tech Mahindra eyes Sloka Telecom

Taking cues from their global peers, the Indian markets started the day’s proceedings on a positive note. While stocks from the software, energy and FMCG sectors are garnering investors’ interest, select stocks from the pharma and consumer durable sectors are at the receiving end. The overall advance to decline ratio is poised at 1.4 to 1 on the BSE. As regards the global markets, while the US market ended in positive territory, European markets ended mixed yesterday. The Asian markets are currently trading weak.

The BSE Sensex and the NSE Nifty are trading higher, up by around 140 points and 31 points respectively. The BSE Midcap and Smallcap indices are trading higher, up by 0.6% each. The rupee is trading at 51.69 to the dollar.

Automobile stocks are currently trading firm led by Tata Motors, Maruti Suzuki and Ashok Leyland. As per figures released by the Society of Indian Automobile Manufacturers (SIAM), total CV sales dipped by 31.7% YoY to 31,069 units (45,478 units) during February 2009. Among CVs, the light commercial vehicle segment sales declined by 4% YoY. The medium and heavy CV segment also reported poor sales. Total medium and heavy CV segment reported an almost 50% YoY decline to 13,003 units (26,718 units). Though overall sales are still in the negative territory, the decline is not as sharp as in the December quarter. The sales had declined by as much as 65% to 70%. This is a probably a sign of a recovery in commercial vehicle segment. Excise duty cuts and lower interest rates have aided the demand in recent months.

IT Stocks are currently trading firm led by Satyam, Tech Mahindra and TCS. As per a leading business daily, Tech Mahindra is eyeing Bangalore based telecom solutions player Sloka Telecom. Sloka Telecom is a five year-old tech start-up firm which provides solutions in the areas of fixed WiMax, Mobile WiMax and 3G. The deal is expected to be in a range of Rs 300 m to Rs 350 m. This acquisition will help Tech Mahindra to enhance its solutions portfolio and which in turn will enable the company to enhance its reach in the telecom segment.