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Realty, pharma not in favour today
Mon, 5 May Closing

The Indian stocks ended the day on a firm note, but after witnessing some profit booking activity during the final hour and a half of trade. The BSE-Sensex closed with gains of about 40 points or 0.2%. The NSE-Nifty closed higher by about 5 points or 0.1%. Barring stocks from the realty, healthcare and information technology space, gains were seen across the board. oil and gas and metal stocks were amongst the most preferred today. The BSE Mid Cap and BSE Small Cap indices ended the day on a weak note, with the indices closing lower by about 0.1% and 0.5% respectively.

Stock markets in other parts of Asia ended the day on a weak note with Japan and Hong Kong closing lower by about 0.2% and 1.3% respectively. The rupee was trading at Rs 60.05 to the dollar at the time of writing.

Cement stocks ended the day on a weak note with Heidelberg Cement, Prism Cement and Ultratech Cement leading the pack of losers. As per a leading business daily, the is facing issues related to cost pressures. As cement prices have not risen in line with the increase in capital and production costs, cement companies are facing cost pressure. Given the rising prices, the costs to set up a green field plant are believed to have increased to as much as Rs 7,200 per tonne as compared to Rs 4,200 a tonne in 2009. The key factors that have led to this are higher power and fuel costs, gypsum costs, logistics costs and distribution costs. Not to mention the fact that wages have increased as well. As per the daily, what are also adding to the pressure are the high taxes on cement as well as the no imposition of duties on imported cement.

During the month of April 2014, foreign institutional investors (FIIs) invested a sum of Rs 96 bn or US$ 1.6 bn in Indian stocks. This made April the eight consecutive month of net inflows. In the month of August 2013, FIIs has sold Rs 59.2 bn. In the year till date, FIIs have invested Rs 323.7 bn or US$ 5.3bn in Indian stocks. The bullishness seems to be on account of the ongoing Lok Sabha elections with high expectations of a particular party coming into power. With the election results to be announced in less than two weeks from now, market participants can expect a significant amount of volatility as investors who feel the positive are all priced in may be looking to exit the markets. As such, we recommend investors to take a cautious approach in the short term.

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