Volatility plagues Indian indices

Mon, 17 Jan Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Markets had a rather volatile outing today. Although they began trading on a firm note, these gains were quickly eroded as selling pressure pushed the indices into the red. From thereon, markets oscillated to either side of yesterday’s close for the larger part of the trading session today and managed to close above the dotted line in the final trading hour. While the BSE-Sensex closed higher by around 22 points (up 0.1%), the Nse-Nifty closed flat. The BSE Midcap and the BSE Small cap were at the received end as they raked losses of 1% each. While IT and FMCG stocks found favour, metals and oil & gas stocks ended the day in the red.

As regards global markets, most Asian indices closed mixed today while European indices have opened in the red. The rupee was trading at Rs 45.56 to the dollar at the time of writing.

Barring Pfizer, most MNC pharma stocks closed weak today. Pfizer India announced good set of numbers for 4QCY10 and CY10. Sales grew by 29% YoY during 4QCY10 (November ending fiscal) led by its pharmaceutical (up 21% YoY) and animal health (up 19% YoY) businesses. Growth in the pharma business was largely due to the strong performance of its top ten products, which grew in healthy double digits. Operating margins improved by 3.5% during the quarter due to a fall in staff costs and other expenditure (as percentage of sales). Other expenditure, in particular, saw a considerable dip of 4.5% to 33.6% of sales during the quarter. Strong growth in operating profits coupled with higher other income led to the healthy 72% YoY growth in the bottomline. For the full year, sales and net profits grew by 17% YoY and 19% YoY respectively.

Plastics major, Sintex announced its 3QFY11 results. The company’s consolidated net sales grew by almost 40% YoY during 3QFY11. Growth was driven by both the plastics and the textiles divisions, especially the former which grew by 41% YoY during the quarter. Operating margins expanded to 16.6% during 3QFY11, from 15% in 3QFY10. This was led by lower staff costs and other expenditure (both as percentage of sales). Led by a strong sales growth and expansion in operating margins, net profits surged by 56% YoY during the quarter. During the nine-month period (9mFY11), net sales and profits grew by 36% and 53% YoY respectively. Further, during the quarter, the company acquired a 30% stake in Durha Constructions to boost monolithic execution capabilities. The stock closed lower today.

Fitch, in its report, has maintained a stable outlook for the Indian oil & gas sector for 2011. This is based on the assumption that the ties between the government and its majority-owned oil companies will not weaken. Having said that, the state oil companies have been bleeding on account of fuel prices being subsidized. Although petrol prices have been hiked, the government is reluctant on freeing diesel prices on account of its impact on inflation. Inflation in India has been high for quite some time now and the government has been at its wits’ end trying to bring it down. To top it all, oil prices have touched the US$ 100 a barrel mark. Thus, the rising crude prices have doused any hopes of freeing diesel prices. In fact, we should be prepared to see more rise in the petrol prices as PSUs are still losing Re 1 per litre after the recent round of price hike.