Weakness all around

Mon, 27 Jan Closing

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Indian stock markets ended the day on a weak note. The BSE-Sensex closed with losses of about 430 points or 2%, while the NSE-Nifty ended lower by about 131 points or 2.1%. Losses were seen across the board with stocks from the realty, banking and metal spaces being the top losers. Mid and smallcap spaces also bore the brunt of negative sentiments with the BSE Mid Cap and BSE Small Cap indices down by about 2.6% to 2.8%.

Stock markets in other parts of Asia traded weak with Japan, China and Hong Kong down by about 2.5%, 1% and 2.1% respectively. The rupee was trading at Rs 63.15 to the dollar at the time of writing.

Auto stocks ended the day on a weak note with Tata Motors, Maruti Suzuki and Ashok Leyland leading the pack of losers. In order to achieve its aim of being a complete commercial vehicles (CV) player with presence in all segments, Mahindra and Mahindra through its subsidiary Mahindra Trucks and Buses is looking to invest Rs 5 bn to develop new segments over the next two to three years. As reported by a leading business daily, the company is planning to launch a brand new platform of commercial vehicles such as ICV (intermediate commercial vehicles) and MCV (medium commercial vehicle). Of the envisaged investments, 60% would be going towards development of a completely new platform for the ICV (8-12 tonnes) segment, a segment which will have multiple applications. The balance would go towards strengthening its existing trucks and buses segments including the refurbishment of the LCV segment. This development comes in at a time when the CV industry is going through one of its toughest times, with volumes declining continually for over one and half year. The stock of M&M ended the day lower by about 2.3%.

Cement stocks ended the day on a weak note with JK Lakshmi Cement, Prism Cement and India Cements. Shree Cement announced its unaudited financial results for the quarter ended December 2013. The company's sales and net profits declined by 6% YoY and 46.9% YoY, respectively during the quarter. Sales decline during 2QFY14 was largely on account of lower revenues from the power segment. The company's profits for the quarter nosedived on account of poor show across most of the parameters. Operating profits fell by 25.6% YoY owing to increases in major cost heads barring power and fuel leading margins to contract from 25.8% in 2QFY13 to 20.5% in 2QFY14. The sharper decline in profits was on the back of lower other income (down by 63.3% YoY during the quarter), coupled with higher depreciation charges. Interest expenses, however, declined by 45% YoY.