Volatility mars Indian indices

Wed, 25 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 in the morning session. However, selling pressure intensified in the afternoon pushing the indices into the red. Ratings agency Standard & Poor's cut India's outlook to negative from stable, citing slow progress on its fiscal situation, as well as deteriorating economic indicators thereby piling on the pressure. While the BSE-Sensex closed lower by around 56 points (down 0.3%), the NSE-Nifty closed lower by around 21 points (down 0.4%). The BSE Mid Cap and the BSE Small Cap were not spared either as they closed lower by 0.5% each. Barring FMCG and auto stocks, losses were seen across sectors.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 52.55 to the dollar at the time of writing.

Software stocks closed mixed today. While Infosys managed to find favour, Wipro and Tata Consultancy Services (TCS) closed into the red. Wipro announced results for the fourth quarter and full year ended March 2012. The company's sales declined by 0.7% QoQ during 4QFY12 as the IT services business (76.9% of total sales) declined marginally by 0.2% QoQ. For FY12, sales grew by 19.8% year-on-year (YoY). Operating margins expanded by 0.5% QoQ to 19.4% during the quarter as compared to 18.9% seen during the previous quarter (ending December 2011). This was due to lower cost of revenues which offset the negative effects of higher selling & marketing as well as the higher general and administration expenses (all as percentage of sales). However for FY12, margins at operating levels were down by 2% YoY to 19.1%. Net profits grew by 1.7% QoQ. This was on account of higher operating margins, higher exchange gains as well as lower interest expense. For FY12, net income increased by 5.2% YoY. Employee strength of the IT services business stood at 135,920 at the end of March 2012. Attrition declined to 17.5% as compared to 19% for 3QFY12. IT services segment added 41 new clients during the quarter, thereby taking the total count of active clients to 943 as compared to 953 seen at the end of 3QFY12.

Reliance Industries also announced results for the fourth quarter and full year ended March 2012. Net sales increased by 17.2% YoY during the quarter. For FY12, the sales were up 32.9% YoY. During FY12, segment wise sales from Refining (73% of revenues) and Petrochemicals (22.3% of revenues) booked an increase of 36.8% and 27.7% YoY respectively, both on account of better volumes and higher realizations. Despite higher realizations, Oil and Gas segment's (4% of revenues) revenues were down by 25.2% due to fall in volumes and transfer of participatory interests in KG D6 basin which was to some extent compensated by higher oil and gas production from Panna Mukta fields. On the margins front, the EBIT margins for Refining, Petrochemicals and Oil and Gas came at 3.3% (4.3% last year), 11.1% (14.7% last year) and 40.7%(38.8% last year) respectively. Despite higher gross refining margins (GRMs) at US$ 8.6 per barrel, the refining and Petrochemicals margins were down due to base effect. The other income for FY12 more than doubled thus offsetting the decline at operating profit level to some extent. Despite a gain at pretax profit level, the net profits declined by 1.2% YoY due to higher effective tax rate in FY12. The stock closed marginally higher today.