Volatile day of trading...

Wed, 28 Jan Closing

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The Indian markets had a rather volatile trading session today as the indices oscillated to either side of yesterday's close. At the closing bell, the BSE-Sensex closed lower by about 12 points, while the NSE-Nifty ended higher by about 4 points. Stocks from the FMCG, metals and banking sectors were the least preferred today, while those from the consumer durables and information technology spaces were in demand. While the Midcap index closed marginally in the positive, the Smallcap index closed in the red.

Asian stocks ended the day on a mixed note, while stocks in Europe were trading weak. The rupee was trading at Rs 61.35 to the dollar at the time of writing.

Auto stocks closed mixed today. While Ashok Leyland and TVS Motors found favour, Tata Motors and Bajaj Auto closed into the red. In FY13, the share of diesel volumes as a part of overall volumes in the domestic auto market had soared because of the widened price differential between petrol and diesel. As reported in a leading financial daily, at the time, petrol prices were higher than diesel by around 3 times. But since then the environment has changed with petrol volumes now accounting for a larger chunk. A hike in diesel prices by the government in the subsequent years has led to the gap between the two fuels narrowing down to around Rs 10-12. As a result, the time to recover the premium paid to buy diesel vehicles has increased to more than three and half years from a little over two years in 2012 for the average buyer. Indeed, according to Maruti Suzuki, share of diesel models in total industry passenger vehicle (PV) sales has come down from 54% in the previous year to 46% at present. Given that now both petrol and diesel prices will be determined by market forces rather than the government, petrol variants could end up having the upper edge since the cost of ownership of a diesel vehicle is higher and also because the latter is more polluting.

Textile stocks ended the day on a mixed note with Bombay Dyeing, Welspun India and Arvind leading the pack of gainers, while Eastern Silk and Kitex Garments closed in the red. Kitex Garments announced results for the third quarter ended December 2014. Sales increased by 22.8% YoY during 3QFY15. However, according to the management, growth would have been higher had the US clients not asked to delay consignments in the month of December. Operating profits increased 106.7% YoY during the quarter on the back of strong revenue growth. This then led to the impressive 104.3% YoY growth in net profits. This came about despite the rise in interest and depreciation expenses by 156.5% YoY and 110.5% YoY respectively. Interest expenses increased as packing credit interest subvention that the company used to get expired in October, while depreciation expenses increased as the company is in expansion mode. Having said that, other income too, witnessed a triple digit growth of 157.6% YoY because of higher forex gains.