Volatility plagues Indian indices

Mon, 13 Feb Closing

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Indian stock markets had a rather volatile outing today. While the indices began the day's proceedings on a cautious note, subsequent sessions saw them oscillating to either side of yesterday's close. Although there was some buying seen in the later hours, this proved short lived as profit booking once again took toll. The final trading hour saw the indices close barely above the dotted line. While the BSE-Sensex closed higher by around 24 points, the NSE-Nifty closed higher by around 9 points. The BSE Mid cap and the BSE Small cap notched gains of 0.4% and 0.1% respectively. Gains were largely seen in auto and metal stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened firm. The rupee was trading at Rs 49.18 to the dollar at the time of writing.

Steel stocks closed mixed today. While Tata Steel and Jindal Steel found favour, Steel Authority of India (SAIL) closed into the red. Tata Steel announced results for the third quarter ended December 2011. The company's consolidated topline grew by 13.8% YoY during the quarter, led by strong volume growth. Consolidated operating profits and operating margins declined by 49.9% YoY and 6.6% YoY respectively on account of higher raw material cost. Consolidated bottomline turned negative during the quarter. This was due to higher cost and lower demand for steel from Europe. Demand from Thailand also declined due to floods in the country. On a standalone basis, the company reported an increase of 13.3% YoY in sales and a decline of 6.1% YoY in net profits. For the nine months ended December 2011, consolidated net sales and net profits increased by 16.4% YoY and 0.03% YoY respectively. While standalone net sales increased by 16.1% YoY, net profits remained flat.

Hindustan Petroleum Corporation Ltd (HPCL) also announced results for the third quarter ended December 2011. The company's topline increased by 41.1% YoY during the quarter. The crude thruput for the quarter stood at 4.08 MMT (million metric tons) versus 4.10 MMT last year in 3QFY11, down 0.5% YoY. However, the market sales (inclusive of exports) increased from 7.05 MMT last year to 7.54 MMT this quarter, up 7% YoY. The company accounted budgetary support of Rs 98.6 bn from the Government for the first nine months, up 115% YoY. Of this, Rs 65.8 bn came during the third quarter. The subsidy towards PDS (Public Distribution Scheme) Kerosene and Domestic LPG (Liquefied Petroleum Gas) stood at Rs 5 bn for the first nine months (up 4.7% YoY). At operating profit level (EBITDA), the company registered around fivefold increase during the quarter. The margins also surged from 2.3% in 3QFY11 to 7.7%. The interest expenses shot up 190% YoY as the company had to borrow more (for the lack of compensation in the previous quarter) at high rates to meet its working capital requirements. At the bottomline level, the company registered an impressive twelve fold increase with net profit margins at 5.7% (versus 0.6% last year). The stock closed lower today.