Selling surges in later hours

Fri, 13 Apr Closing

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Indian stock markets had a rather volatile outing today. The indices began the day's proceedings on a cautious note and barely managed to stay afloat throughout the morning session. However, selling pressure intensified in the afternoon and pushed the indices deep into the red where they languished till the closing bell. While the BSE-Sensex closed lower by around 238 points (down 1%), the NSE-Nifty closed lower by around 69 points (down 1%). The BSE Mid cap and the BSE Small cap were not spared either as they closed lower by 1% each. Barring FMCG and healthcare stocks, losses were seen across sectors.

As regards global markets, Asian indices in the green today while most European indices have opened in the red. The rupee was trading at Rs 51.49 to the dollar at the time of writing.

Auto stocks closed mixed today. While Maruti Suzuki and Hero MotoCorp found favour, Ashok Leyland and TVS Motors closed into the red. As per a leading business daily, Maruti Suzuki is looking to hire about 500 workers in this fiscal for the second unit at Manesar facility that was operationalised last year. Maruti had announced investments of over Rs 36 bn to set up two new plants having capacity of 250,000 units each at the Manesar facility. While the second unit was opened last year, the third one is scheduled to be operational in FY13. Besides this, the company has also begun wage negotiations for a three-year period with its workers at the Gurgaon facility. The same for the Manesar plant employees is likely to start within next 2-3 weeks. It must be noted that the labour strike in Maruti's Manesar plant caused severe disruption in production in FY12. As a result, the company witnessed considerable decline in volumes bringing down the growth of the overall passenger car industry as well.

As per a leading business daily, India's factory output for February grew by 4.1% YoY. This slow growth was largely attributed to the tight monetary policy and global factors. Having said that, February's industrial growth performance was higher than the revised growth rate of 1.1% in January. With slower growth in tow consecutive months, expectations are that the Reserve Bank Of India (RBI) would signal a rate in cuts in its next monetary policy. So far, the central bank has obliged with cuts in the cash reserve ratio (CRR) . But whether it will cut rates at the same pace as it hiked them remains to be seen as the key here is inflation. Rise in excise duty would lead to increase in prices of goods and if the rupee depreciates further, it will only lead to 'imported inflation'. Thus, it will be interesting to see what the central bank chooses to do in its next monetary policy.