Indices snap 5 day winning streak

Tue, 7 Feb Closing

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Indian stock markets opened the day on a strong positive note. However towards the middle of the session, the indices came off the day's on profit booking in the index heavyweights. The latter half of the session saw the indices fall below breakeven levels. While the BSE-Sensex closed lower by around 85 points (down 0.5%), the NSE-Nifty closed lower by around 27 points (down 0.5%). The BSE Mid cap and the BSE Small cap also traded lower notching losses of 0.8% and 0.4% respectively. Gains were largely seen in Oil and gas and consumer durables space. On the other hand engineering and realty stocks traded lower.

As regards global markets, Asian indices closed in the red today while European indices also opened weak. The rupee was trading at Rs 48.97 to the dollar at the time of writing.

In a pre-budget survey in Feb last year, the government estimated that the growth for FY12 would come in at around 9%. But as per the latest figures, economic growth in India is likely to fall to a three-year low of 6.9% in FY12. The Indian economy expanded by 8.4% in both FY11 and FY10, while growth in FY09 was 6.7%. The muted performance this year was mainly on account of a sharp slowdown in manufacturing, agriculture and mining sectors, against 8.4% expansion in the previous year. The global economic slowdown and the high interest rate regime in India put a dampener on growth this fiscal.

MOIL Limited has announced results for the third quarter ended December 2011 (3QFY12). The company produces more than half the manganese ore used in India. The company has reported a 5.4% YoY decline in net sales and 19.5% YoY decline in net profits. Operating profits declined by 32.5% YoY operating margins declined by 17.7% YoY. Net profit margins declined by 7.4% YoY. The decline in net sales can be attributed to lower volumes growth. Revenues from mining division declined by 9% YoY. Decline in margins were due to high expenditure which increased by 41% YoY. For the nine months ended December 2011, net sales declined by 21.4% YoY and net profits declined by 31.7% YoY. The board also approved an interim dividend of Rs 2 per share. However, due to a disappointing set of numbers the stock traded lower by 5%.

Utility vehicle marker Mahindra & Mahindra Ltd. (M&M) announced its financial results for the third quarter of the year 2011-12. The company's sales rose 37% to Rs 83.3 bn from Rs 60.7 bn previously. However the company reported a 10% drop in quarterly profits. Rising commodity costs put pressure on margins. The passenger utility vehicle segment saw a year-on-year (YoY) growth of 23% versus an industry growth of 18%. M&M was able to maintain its market share of 57.8%. The company saw good growth in its export segment which grew by 51% YoY. The company has seen significant traction from SAARC, South American and South African markets. In light of a slowdown in the economy, the company's tractor business saw relatively muted growth with sales growing by 13% on a YoY basis. The company's market share in this segment was 42.9%. However, due to a disappointing profit numbers the stock traded lower by around 3%.

The auto maker has seen significant traction from the sale of its premium SUV, XUV 500. During the first launch phase in October 2011, the XUV 500 received over 8,000 bookings in just 10 days across 5 cities. This forced M&M to freeze the bookings. Now in the second phase the company has already received over 25,000 bookings. The company is trying ramp up the production of XUV 5OO to 3,000 units a month in the short term from 2,500 units a month currently.