Thursday, May 21, 2009

Closing bell 21 May 2009

Closing bell 21 May 2009

The Indian markets continued their downward movement during the final hour of trade as profit booking amongst the index heavyweights led the BSE-Sensex to end the day with losses of around 320 points. The NSE-Nifty closed lower by about 60 points. However, stocks from the mid-cap and small-cap space ended higher by 0.3% and 3% respectively. The losers were led by stocks from the capital goods, banking and auto sectors.

Other Asian markets ended the day on a negative note. The European indices are currently trading mixed. Rupee was trading at 47.44 against the US dollar at the time of writing.

As per a leading business daily, TCS expects to witness a higher growth from the Asia-Pacific (Apac) region going forward. However, it may be noted that the company has witnessed a lower growth during the past few quarters from the region but now expects its business from the region to grow comparatively higher than from the others. Apac contributes to around 4.7% of the company's total revenues, which include major countries like Japan, China and Australia. However, with India included it contributes to around 13% of TCS's total revenues. TCS has been looking to exploit opportunities in Apac considering the region's lower ticket size and huge volumes. The stock of TCS ended the day on a weak note along with Infosys and Wipro.

LMW announced results yesterday. The company's sales fell by 39% YoY in FY09 and 70% YoY in 4QFY09. This fall in its revenues was led by a fall in the sales of its textile machinery segment which witnessed a 41% YoY drop in sales during the fiscal. Its operating margins contracted by 4.6% during the fiscal, owing to an increase in employee costs and other expenditure (as percentage of sales). Impacted by a combination of a dip in operating margins and a jump in depreciation charges as a percentage of sales, the company's net profits fell by 56% YoY during FY09.

Even as economic and financial commentators here in India express their dismay at India's slowed pace of GDP growth, the fact remains ‘some growth' is better than ‘no growth'. But for many countries around the world, even no growth would seem like a luxury. Take countries like Japan, Mexico and Germany for example. In recent reports of each of these countries' GDP growth figures for the first quarter of 2009, they reported some miserable numbers to say the least. Mexico's gross domestic product fell at an obscene rate of 21.5% (annualized) during the quarter, its worst performance since the 1995. Germany and Japan too have similar grim stories to tell; their GDPs fell 14.4% and 15.2% respectively.

The markets continued their southward journey during the previous two hours of trade on account of sustained selling activity witnessed across large cap stocks. However, midcap and smallcap stocks remained firmly in the green. Stocks from the auto, engineering and aluminium sectors are leading the pack of losers, while select energy, pharma and telecom stocks are trading firm. The overall advance to decline ratio is poised at 5.3 to 1 on the BSE.

The BSE-Sensex and NSE-Nifty are trading weak, down by around 190 points and 30 points respectively. However, the BSE-Midcap and BSE-Smallcap indices are trading higher, up by around 1% and 4% respectively. The rupee is trading at 47.35 to the dollar.

Energy stocks are trading mixed. While ONGC and BPCL are trading higher, Reliance Industries and GAIL are trading lower. As per a leading business daily, Reliance Industries has received approval from the government to allocate gas from the KG basin to city gas distribution firms (CGD) in Delhi, Mumbai, Ahmedabad, Gandhinagar, Agra, Indore and Ujjain. The petroleum ministry has instructed RIL to execute gas sales agreements with these firms. It may be noted that the company will supply around 834,631 standard cubic meters per day of gas to CGD entities like Mahanagar Gas, Indraprastha Gas, Sabarmati Gas, Green Gas, Avantaka Gas and HPCL. This is a positive development for RIL as well as the CGD's as it will aid their topline growth.

Opto Circuits is trading higher. As per a leading business daily, Opto Circuits' US based subsidiary Mediaid has received approval from Brazilian authority Agencia Nacional de Vigilancia Sanitaria (ANVISA) for marketing and sale of its Pulse Oximetry (SPO2) products (Patient Monitors & Sensors) in Brazil and surrounding geographies. It may be noted that the Pulse Oximetry (SPO2) products also has US FDA approval. Mediaid has a strong distribution network across US, Latin America and Europe. This development will help the company to aggressively sell its products in Latin America, thus enabling it to strengthen its position in these markets. Currently, the stock of Opto Circuits is trading higher.

The Indian markets gained ground during the previous two hours of trade on the back of intense buying activity witnessed among the index heavyweights. Stocks from the realty and energy sectors are leading the pack of gainers, while select auto and engineering stocks are trading weak. The overall advance to decline ratio is poised at 7.6 to 1 on the BSE.

While the BSE-Sensex is trading lower by 60 points, the NSE-Nifty is trading higher by around 30 points. The BSE-Midcap and BSE-Smallcap indices are trading higher, up by around 3% and 6% respectively. The rupee is trading at 47.38 to the dollar.

FMCG stocks are trading mixed. While HUL and Dabur India are trading in the red, P&G is trading firm. As per a leading business daily, Dabur India plans to enter the mainstream personal care market and expand its skincare range. As of now, the company caters to personal care market through its Gulabari brand. It may be noted that the company has recently acquired the skin care firm, Fem Care, the acquisition process of which is expected to be completed within a month. The acquisition would further boost Dabur's presence in the segment. However, given the competition in the skincare segment with dominant players like HUL and P&G, Dabur's success would only depend on the kind of products it focuses on and the niche which its develops.

As per a leading business daily, Grasim has put on hold the expansion plans of ready mix concrete (RMC) business. This view comes in the wake of demand slowdown from the real estate sector. The company so far has invested around Rs 3 bn in the RMC business and has 39 RMC units. The company had earlier planned an investment of Rs 4 bn in the RMC business, which it later reviewed to Rs 2.7 bn. However it ultimately ended up investing only Rs 1 bn during FY09 and has ruled out any further investment in FY10 until the demand picks up. It may be noted that, ACC has also frozen its Rs 6 bn investment in the RMC business on the back of a slowdown in the real estate sector. The stock of Grasim is trading weak along with ACC and Ambuja Cements.

In line with its Asian peers, the Indian markets have opened the day's proceedings on a negative note. While power and construction stocks are trading higher, auto, energy, engineering and metal stocks are among the losers. The overall advance to decline ratio is poised at 5.6 to 1 on the NSE. As regards global markets, against the backdrop of the Federal Reserve reducing its growth targets and raising unemployment expectations, the US markets ended in the red. The European markets closed higher yesterday. The Asian indices are currently trading lower.

The BSE Sensex and the NSE Nifty are trading lower by around 88 points and 15 points respectively. The BSE Midcap and BSE Smallcap index are both trading higher by 2%. The rupee is trading at 47.36 to the dollar.

Bharat Forge announced its FY09 results yesterday. The standalone topline fell 6% YoY during the fiscal on account of poor macroeconomic conditions during the second half of the year. The operating margins contracted 210 basis points (2.1%) from last year's levels as costs fell at a lower rate than the topline. Higher depreciation charges and exceptional losses further compounded problems for the company, leading to a 62% YoY drop in the bottomline. Standalone profits for the fourth quarter fell 26% YoY on the back of a 50% drop in topline. The consolidated bottomline plunged 56% YoY despite a 3% growth in topline for the full year. Auto stocks are trading mixed.

Steel major Tata Steel has indicated of not selling its stake in UK plant to Italy's Marcegaglia and South Korea's Dongkuk Steel. Marcegaglia and Dongkuk in January had agreed to buy an 80% stake in the Teesside plant in England, for an estimated amount of US$ 600 m. The memorandum of understanding for the sale expires in June this year. Recently, four international slab buyers had cancelled a 10-year contract to buy almost 78% of Teesside's output.However, the company is likely to continue the operations in the plant. It may be noted that, Tata Steel has cut the production at the European plants by 25% in the last 2 quarters. Steel stocks are trading lower.