Late buying fuels indices

Mon, 4 Jun Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Indian stock markets languished in the red for the larger part of the trading session today on the back of relentless selling pressure across index heavyweights. However, the afternoon session saw buying activity picking pace as a result of which the indices managed to break above the dotted line. The final trading hour saw the indices close barely into the positive. While the Sensex today closed higher by around 23 points, the NSE-Nifty today closed higher by around 7 points. The BSE Mid cap and the BSE Small cap, however, bucked the trend as both closed lower by 0.2%. Gains were largely seen in banking and oil & gas stocks, while FMCG stocks were at the receiving end.

As regards global markets, Asian indices closed in the red today while European indices have opened mixed. The rupee was trading at Rs 55.49 to the dollar at the time of writing.

Auto stocks closed mixed today. While Tata Motors and Hero Motocorp found favour, Bajaj Auto and TVS Motors closed in the red. The slowdown in the Indian economy continues to adversely impact Indian auto companies. Bajaj Auto has announced volume numbers for May 2012. The company sold 321,922 motorcycles in May 2012 compared to 317,989 units in May 2011, a tepid growth of 1%. The commercial vehicles (CV) segment registered a 26% fall, with sales declining to 30,297 units compared to 40,860 units during May 2011. Overall sales fell by 2% to 352,219 units compared to 358,849 units in May last year. It must be noted that for FY13, the company has set a target of selling a total of 5 m units, translating as a 15% YoY increase in overall volumes. During FY12, the company sold a total of 3.8 m motorcycles. Domestic motorcycles volumes stood at over 2.5 m units. The management expects the domestic market to grow at a pace of 6-7% on an overall basis this year. This 6% to 7% growth in volumes in the domestic market would translate to a total of 2.72 m to 2.75 m units. Therefore, to meet its target the company would have to go all out in selling motorcycles in the export markets this year.

Aurobindo Pharma had a forgettable FY12 wherein issues with the US FDA (for plants unit III and unit VI), lower dossier income and anti-retroviral sales impacted overall performance. However, there has been some relief for the company. The FDA has started approving drugs from Aurobindo Pharma's unit III and is also expected to audit unit VI in July-September. Unit VI especially is a key facility manufacturing cephalosporins (anti-infectives) in the injectables space. It must be noted that the USFDA had inspected the company's unit III and unit VI, both located in Andhra Pradesh, in 2010 and found significant violations of its goods manufacturing norms. The regulator thus issued a warning letter to the company along with an import alert in 2011. Given that unit III is operating at optimum capacity, plans are to shift some production to unit VII. Having said that, once the company receives the green signal for unit VI, it will result in a ramp up in performance. From its unit VI, Aurobindo had made applications for a total of 24 drugs in the US. The stock closed 1% higher.