Profit booking takes toll

Tue, 7 Jan Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Indian equity markets began the day's proceedings on a firm note. However, in the subsequent hours selling activity intensified across index heavyweights and pushed the indices into the red. There was no respite in the final trading hour either as the indices closed well below the dotted line. While the BSE-Sensex today closed lower by 94 points, the NSE-Nifty closed lower by 29 points. While the BSE Mid Cap closed lower by 0.4%, the BSE Small Cap bucked the trend and gained 0.4%. Losses were largely seen in metals, oil & gas and IT stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 62.35 to the dollar at the time of writing.

Most steel stocks closed weak today with the key losers being Steel Authority of India Ltd (SAIL) and Tata Steel. As per a leading business daily, steel consumption grew by a mere 0.5% to 53.8 m tonnes in the period April-December 2013. This was largely on account of the slowdown in the economy and sharp fall in imports. The Indian economy had grown at a decade low of 5% in FY13 and grew by 4.8% in the September 2013 quarter. Meanwhile, imports fell by as much as 29.2% YoY. Production for the sale of finished steel, however, managed to grow by 5% YoY during the April-December period. This was largely led by growth in production of major players such as SAIL and Tata Steel. Unless there is a recovery in the Indian economy, steel consumption could continue to face pressure in the coming months.

Auto stocks closed mixed today. While Maruti Suzuki and Mahindra and Mahindra (M&M) found favour, TVS Motors and Ashok Leyland closed into the red. As per a leading business daily, Ashok Leyland is looking to reduce its debt burden. This is by optimizing resources, rationalizing working capital and through better planning and execution. Thus, the company is looking to reduce debt by Rs 10 bn. It must be noted that 1HFY14 was quite poor for the company as headwinds in the CV industry impacted the company's sales and profitability. The CV industry is closely linked to the Indian economy. Therefore, the slowdown in the latter has adversely impacted the CV industry which has seen volumes decline substantially in the fiscal so far. Ashok Leyland's peer Tata Motors has not been spared either. Thus, unless the Indian economy recovers, the CV industry and consequently Ashok Leyland and Tata Motors could continue to face pressure in the coming quarters.