Stock markets trip as Fed cuts stimulus

Thu, 30 Jan 09:30 am

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Barring South Korea (up 1.2%), the major Asian stock markets have opened the day on a negative note with Japan (down 2.9%) and Taiwan (down 1.6%) leading the losses. Apart from the weak data from China and Japan, Fed's decision to further cut stimulus led to a sell off in the Asian markets. The Indian share markets have also opened the day on a weak note. All sectoral indices have opened in the red with the stocks in consumer durables and realty space leading the losses.

The Sensex today is down by around 194 points (0.9%), while the NSE-Nifty is down by around 60 points (0.9%). Mid cap and small cap stocks have also opened in the red with the BSE Mid Cap and BSE Small Cap indices down by around 0.9% each. The rupee is currently trading at Rs 62.79 to the US dollar.

Energy stocks have opened the day mainly in the red with Chennai Petroleum Corporation Ltd (CPCL) and Bharat Petroleum Corporation Ltd (BPCL) leading the losses. Gas Authority Of India Ltd. (GAIL) (India) Ltd has announced results for the quarter ending December 2013. The company has reported 28% year on year (YoY) growth in revenues. The growth in the revenues was mainly on account of increase in gas price. GAIL sold 8.6 million standard cubic metres per day (mscmd) of imported natural gas during the quarter, as compared to just 3.2 mscmd in the corresponding quarter last year. The operating profits for the quarter grew by 14.4 % YoY with operating profit margins at 14.3%, as compared to 16.0% in the corresponding quarter last year. The company was exempted from paying fuel subsidy as the Government has decided to cap the company's contribution towards fuel subsidy to Rs 14 bn (which the company has already paid in first six months of FY14). As such, the net profits for the quarter witnessed a growth of 31% YoY. Besides, the profits were boosted by sale of shares in China Gas. The company sold 60 million out of 210 million shares in China Gas at a price of US$ 8.2 per share (as compared to a buy price of US$ 1.15 per share). Excluding the gains from shale sale, the growth in the net profits comes at around 9%.

Retail stocks have mainly opened the day on a mixed note with Provogue (I) Ltd and Zodiac Clothing leading the gains. However, Titan Company Ltd and Shoppers Stop witnessed losses. Titan Company Ltd has announced results for the quarter ending December 2013. The company witnessed poor retail sales in the festive quarter in both its watches and jewellery businesses. The net sales for the quarter declined by 11% YoY. The revenues in the watches segment grew by 7.5% YoY despite 10% drop in volumes. The revenues in the jewellery segment (80% of the revenues) fell by 15.4% YoY. The operating profit for the quarter also declined by 14% YoY with expenses dropping by 11% YoY. However, margins in jewellery segment improved to 10.2% in the quarter from 9.8% in the same period last year. The margins in the watch segment fell 11.3% to from 12.1% in the corresponding quarter last year. The net profit for the quarter declined by 18.6% YoY. Apart from the weak operating performance, the bottomline was also hurt by finance costs that more than doubled on a YoY basis.