Markets end on a flat note

Wed, 29 May Closing

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While the indices in the Indian share market edged higher during the closing session, it was just enough to make them close the day on a flat note. Thus, while Sensex closed marginally lower by around 14 points, NSE-Nifty lost around 7 points. BSE Mid Cap and BSE Small Cap indices lost more than their large cap counterpart, ending lower by 0.4% and 0.2% respectively. Nearly three stocks closed lower for every one that closed the day on a positive note.

While Asian stocks closed mostly in the green today, Europe is trading in the red currently. The rupee was trading at Rs 56.2 to the dollar at the time of writing.

With the quantitative easing story largely intact, today's decline could be seen in the context of the markets taking a bit of a breather. Thus, we won't be surprised if it doesn't take long for the buying activity to resume. Although domestic investors have largely been absent in the current rally, we hope they don't enter after the markets having gone up substantially with no quality stock trading cheap. It is during such times the tendency to invest in value traps the maximum we believe and this should be avoided at all costs. A lot of times, cheap stocks are cheap for a reason and what is down could end up going down even more. Thus, investors need to be wary of this, especially when broader markets seem overvalued.

Tata Chemicals, one of India's largest manufacturer of soda ash as well as fertilisers, closed lower on the bourses today. This was perhaps in response to the poor financial performance of the company for the quarter as well as for the full year. The company registered a loss on a consolidated basis to the tune of Rs 1.9 bn as impairment charges in the region of Rs 5 bn took its toll. The loss pertained to the revaluation undertaken mostly at its European operations. As a consequence of this charge, profits for the full year also suffered, falling more than 50% on the back of an 8% growth in topline. Company's operating performance was also not much to write home about as margins for both the standalone as well as the consolidated entity fell during the quarter.

Gas Authority of India (GAIL), the gas transmission behemoth also announced its fourth quarter and full year FY13 results recently. The company's topline registered a growth of 19% YoY during the quarter whereas the bottomline edged higher by 28% YoY as the company's operating margins also improved. Profit for the full year however, grew 10% YoY on the back of an 18% growth in topline. The company provided discount of Rs 5.9 bn for the quarter (down 58.0% YoY) to share under recoveries on LPG. For FY13, the discount stood at around Rs 26.9 bn, down 15.6% YoY. The stock closed lower by around 2% today.