Profit booking takes toll

Mon, 23 Apr Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Indian stock markets languished in the red for a larger part of today's trading session. The indices began the day's proceedings barely in the positive, and selling pressure only intensified in the later hours pushing the indices into the red. There was no respite in the final trading hour either and the indices closed below the dotted line. While the BSE-Sensex closed lower by around 277 points (down 2%), the NSE-Nifty closed lower by around 90 points (down 2%). The BSE Mid cap and the BSE Small cap were not spared either as they closed lower by 2% each. Losses were largely seen in IT, metals and banking stocks.

As regards global markets, Asian indices in the red today while European indices have also opened weak. The rupee was trading at Rs 52.52 to the dollar at the time of writing.

Barring ACC, most cement stocks closed in the red. ACC declared results for the first quarter ended March 2012. On a standalone basis, ACC's net sales rose by 19.3% YoY. The rise in revenue was led by 9.3% YoY rise in sales volume and about 10% improvement in cement realisations. On the cost front, power and fuel costs witnessed a rise of 3.7% as a percentage of net sales. As a result, operating profit grew at a slower rate of 11.2% YoY. Operating margins declined from 23.1% in 1QCY11 to 21.5% in 1QCY12. Other income rose by 41.7% YoY during the quarter on account of incentives and sales tax written back which pertained to prior years. On the other hand, interest costs were also higher by 25% YoY during the period. Profit before tax and exception items rose by 13.5% YoY. During 1QCY12, ACC retrospectively changed its depreciation method on fixed assets pertaining to captive power plants because of which there was an additional depreciation charge. The amount pertaining to earlier years has been reported by the company as an exceptional item. Owing to this, ACC's net profits dipped by 55.7% YoY. If not for the change in depreciation method, the net profit for the current quarter would have been higher by Rs 2,305 m.

Energy stocks closed mixed today. While Oil and Natural Gas Corporation Ltd. (ONGC) and Reliance Industries Limited (RIL) found favour, Essar Oil, Bharat Petroleum Corporation Ltd. (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) closed in the red. As per a leading business daily, ONGC is planning to set up a Rs 50 bn urea fertiliser manufacturing unit in North Tripura district. The site for establishing the project is Khobal. This is keeping in mind close proximity to the Khobal gas field from where the natural gas (hydrocarbon) would be supplied. With the commissioning of the project, the demand for urea fertiliser will be met not only for Tripura but also for the entire North-East region and a large chunk of the fertiliser could be exported to Bangladesh. The aim of this is to ensure optimum utilization of natural gas. The first phase of this project is expected to be completed by June.