Auto stocks drive final hour gains

Tue, 14 Feb Closing

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Impending risks in the Euro zone and a series of credit rating cuts seems to have has unnerved investors across Asian markets today. Taking cues from peers in Asia, the indices in Indian stock markets opened lower and stayed close to the dotted line in early hours. The final hours, however, saw buying interest in the auto sector and select banking and engineering stocks. While the BSE-Sensex closed higher by around 75 points, the NSE-Nifty closed higher by around 26 points. The BSE Mid cap and the BSE Small cap notched gains of 1.2% and 0.8% respectively.

As regards global markets, Asian indices closed mixed today while European indices have opened firm. The rupee was trading at Rs 49.32 to the dollar at the time of writing.

The Reserve Bank of India (RBI) today raised the bank rate or the bill discounting rate, to 9.5% from 6% earlier, with immediate effect. While key lending rates have been tweaked, the bank rate has, however, been kept unchanged at 6% since April 2003. This was mainly because monetary policy signaling was done through modulations in the reverse repo rate and the repo. The rise in bank rate therefore does not signal any change in the RBI's monetary policy stance.

As per a business daily, the Oil Minister has announced the launch of India's first-ever bid round for exploration of shale gas by December 2013. Six basins, namely Cambay, Assam-Arakan, Gondawana, KG onshore, Cauvery onshore and Indo Gangetic basins, have been identified that may have shale gas potential. The country has, so far, only explored and produced conventional oil and gas as well as unconventional sources such as coal bed methane (CBM). Shale gas trapped in sedimentary rocks below the earth's surface is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs. These unconventional deposits have raised estimates for US gas reserves from 30 years to 100 years at current usage rates. With India facing huge energy shortage and rising import bill, effective exploration of shale gas could be benign for oil and gas companies and the economy as a whole.

Textile major, Arvind Ltd, declared results for the third quarter of financial year 2011-12 (3QFY12) yesterday. The company reported 20% growth in set sales for the third quarter. The profit numbers, however, appreared bloated due to the profit from sale of stake in Arvind's erstwhile JV with VF Corp. Excluding the extraordinary gains, the growth in profit was 8% YoY despite some forex losses. The textile business that comprised 68% of revenues grew 21% YoY. The brand and retail business on the other hand grew by 32% and comprised 22% of overall revenues. The company's debt to equity stood at 1.1 time while the return on capital employed stood at 15.5% for the nine month period.