Later buying fuels positive close

Mon, 2 Jan Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Indian stock markets had a rather volatile outing today. The indices began the day's proceedings on a cautious note and the larger part of the day saw the markets oscillating to either side of yesterday's close. However, buying activity intensified in the later hours causing the indices to close above the dotted line. While the BSE-Sensex closed higher by around 63 points (up 0.4%), the NSE-Nifty closed higher by around 12 points (up 0.3%). The BSE Mid cap closed flat, while the BSE Small cap closed marginally into the positive. While buying was seen across sectors, FMCG and healthcare stocks were at the receiving end.

As regards global markets, Asian indices closed mixed today while the European indices have opened in the green. The rupee was trading at Rs 53.12 to the dollar at the time of writing.

As per a leading business daily, power trading firm PTC India is in talks with a sovereign wealth fund for setting up a private equity fund, which is likely to have an initial capital of about US$ 100 m. Although this new fund is likely to be floated next fiscal, further details of the same have not been divulged. PTC India already has a subsidiary PTC India Financial Services (PFS), which lends to power sector including renewable energy projects. It must be noted that ahead of the competition heating up further in the power trading business, PTC is in the process of diversifying its business by entering into long-term (spanning 10-35 years) contracts with power generators and buyers. While the ratio of long-term to short-term contracts stands at 30:70 currently (i.e., 70% of total volumes traded by PTC are short term in nature), the company aims to reverse it to 70:30 over the next 2 to 3 years. The total power sale agreements (PSAs) signed by the company as on June, 2011 were 5,409 MW (includes cross border trade). The cumulative MOU contracts were for 12,736 MW. The stock closed higher today.

Auto stocks closed mixed today. While Tata Motors and Maruti found favour, Bajaj Auto, Hero Motocorp and Mahindra & Mahindra (M&M) were at the receiving end. Auto companies reported subdued sales volume numbers for December 2011. Maruti Suzuki's domestic sales fell for the seventh month in a row with a 13.4% drop in December to 77,475 units. The company attributed this decline to maintenance shutdown at its plant during the month. Exports, however, saw a robust growth of 50.5%. In a challenging market, Bajaj Auto logged in a growth of 8% in motorcycles, and a 27% YoY growth in commercial vehicles. Exports grew by 25% YoY. M&M's volume performance during the month was rather tepid as domestic sales were up by a mere 1% YoY, while growth in tractor sales remained flat. The auto industry in recent times has been facing some headwinds in the form of higher interest rates and fuel prices which have dampened demand. With the Reserve Bank Of India (RBI) signaling a pause in rate hikes and the possibility of rate cuts in the coming quarters, it remains to be seen whether this move will result in reviving sales volumes of automobiles in the domestic market.