New week, old result!

Mon, 10 Jan Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

There was no let up in selling activity during the closing stages. In fact if anything, selling only intensified and consequently, the indices closed the day deep in the red on yet another occasion. BSE-Sensex lost in the region of around 470 points (down 2.4%) whereas NSE-Nifty witnessed decline to the tune of 150 points. While the BSE Midcap index mirrored its large cap counterpart, BSE Small cap index suffered even more and shed some 3% from its value today. Only two stocks from the Sensex could manage to close the day in the positive. All the others suffered a decline, with a handful of them even losing as much as 5%-6%.

While majority of the Asian indices closed in the red today, European indices are also trading weak currently. Rupee was pegged at Rs 45.5 to the dollar at the time of writing.

Today’s decline comes close on the heels of last week’s dismal performance, where the index suffered a decline of around 4%. Thus, the indices seemed to have lost quite a bit of their market cap in the past few trading sessions. With inflation showing no signs of easing up and with economic prospects in the US beginning to look up, it appears that in the near term, the pressure on the indices would persist. However, if the selling is overdone, it could present a fantastic opportunity to take advantage of the long term India growth story.

Nalco, the domestic aluminium behemoth, closed lower on the bourses today as it lost around 2% of its value. This despite assertion by the company’s management that it is expecting a 25% growth in company's net profits in the current fiscal. It should be noted that the company's net profits had nosedived around 36% during the FY10 fiscal when compared to FY09 profits. This was on account of drop in realisations and higher fuel costs inspite of an increase in volumes. However, the situation has looked quite good so far this year, with the company reporting 40% YoY growth in net profits during the second quarter and on the back of a 27% YoY growth in topline. The company has lined up a huge Rs 400 bn capex program in both India as well as abroad and the same is likely to help the company in achieving revenues of Rs 250 bn by 2020.

PSU banking major, Bank of Baroda was amongst the select companies that manage to close the day on a relatively stronger note. It gained around 0.5% in value today. The buoyancy seemed a result of news doing the rounds that the bank is planning to acquire a bank in Botswana, Africa. It should be noted that the African nation has had its stock go up in recent times amongst Indian banks as the SBI and Bank of India are also planning to start operations in Botswana. Like most other Indian banks, the objective of these banks too seems to tap the vast Indian diaspora in the region and to get access to some cheap low cost funding.