Volatility mars Indian indices

Fri, 21 Jun Closing

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Indian equity markets had a rather volatile trading session today as they oscillated to either side of yesterday's close. The indices began the day's proceedings on a weak note but buying activity gained momentum thereafter pushing the indices into the positive. Although the indices made a brief foray into the red in the afternoon session, buying resumed once again ensuring a positive close in the final trading hour. While the BSE Sensex today closed higher by 55 points, the NSE-Nifty closed higher by 12 points. The BSE Mid Cap and the BSE Small Cap index bucked the trend, however, and closed lower by 1% and 0.4% respectively. Gains were largely seen in IT and oil & gas stocks.

As regards global markets, most Asian indices closed in the red today while European indices have opened mixed. The rupee was trading at Rs 59.15 to the dollar at the time of writing.

Auto ancillaries stocks closed mixed today. While Exide Industries and Bharat Forge found favour, Amara Raja Batteries and Bosch Ltd closed into the red. As per a leading business daily, the steep depreciation of the rupee against the dollar is likely to take its toll on Exide Industries. The impact will mostly be on lead prices. Lead is the key raw material for the company accounting for almost 70% of the raw material cost. Not just that, out of the total lead requirement, the company imports around 70%. Thus, the fall in the rupee is bound to put pressure on the company's margins. This does not bode well in a scenario where the auto industry has been reporting subdued volumes. As far as auto is concerned, the company caters to replacement as well as the original equipment (OE) segment. OE demand was quite tepid in FY13 and has been flat in the first quarter of FY14 as well. Because of this, Exide Industries faced an unexpected drop in capacity utilization on the back of the 10% decline in OE demand in the last two months.

As per a leading business daily, NTPC has taken a step forward in its bid to take possession of private land for its 1,600 MW super thermal power plant proposed at Darlipalli in Odisha. The company required 1,274.9 acres of private land for the main section of the project. The state government has issued possession certificate for 1,205.79 acres. The proposals for the rest of the land are in various stages of processing. The cost of this power plant has been pegged at Rs 128.5 bn. NTPC has secured coal linkage for this project in the form of Dulanga block which has a capacity to produce 7 m tonnes coal per annum (mtpa) under command area of Mahanadi Coalfields Ltd (MCL) and Pakri Barwadih block in Bihar which has a capacity of 12.5 mtpa. It must be noted that NTPC's generation capacity stood at 41,184 MW at the end of FY13. The company added capacity of 4,170 MW during the year, while adding 4,830 MW in commercial operations. The stock closed higher today.