Persistent selling mars indices

Tue, 2 Aug Closing

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Indian stock market had a weak outing today as relentless selling pressure led the indices to languish in the red throughout the day. There was no respite in the final trading hour as well and the indices closed well below the dotted line. While the BSE-Sensex closed lower by around 204 points (down 1%), the NSE-Nifty closed lower by around 60 points (down 1%). The BSE-Midcap and BSE-Small cap were not spared either as they as they closed lower by 1% each. Barring healthcare and oil and gas stocks, losses were seen across sectors.

As regards global markets, Asian indices closed weak today while European indices have also opened in the red. The rupee was trading at Rs 44.26 to the dollar at the time of writing.

PSU banking stocks closed weak today and the key losers here were SBI, Punjab National Bank and OBC. Oriental Bank of Commerce (OBC) declared its results for the first quarter of financial year 2011-2012 (1QFY12). The bank's interest income grew by 27% YoY in 1QFY12 on the back of 14% YoY growth in advances. Net interest margins (NIM) saw a decline from 3.3% to 2.9% in 1QFY12. Net profits saw a 2% YoY fall in 1QFY12, on account of higher interest costs and the new RBI provisioning norms. Net non-performing assets (NPA) increased sharply to 1.1% of advances in 1QFY12 from 0.7% in 1QFY11 thereby indicating a slippage in asset quality. Capital adequacy ratio stood at 13.6% (as per Basel II) at the end of 1QFY12. The bank opened 23 branches during 1QFY12. It has a branch expansion plan of 173 branches for FY12.

Cement stocks also closed in the red today and those at the receiving end were Madras Cements, Shree Cement and ACC. ACC also announced its results for the quarter ended June 2011 (December ending company). On a standalone basis, ACC's net sales rose by 18.9% YoY during the quarter. The rise in revenue was led by a rise of 11.8% YoY in sales volume. However, operating profits dropped marginally by 0.5% YoY on the back of steep rise of 26.2% YoY in operating costs. Power and fuel costs rose substantially by 8.7% YoY (as a percentage of net sales) on account of high coal prices. Overall inflationary environment caused freight costs to shoot up by 3.9% YoY (as a percentage of net sales). Depreciation and interest expenses were higher due to the ongoing capacity expansion and commissioning of various projects. As a result, net profits declined by 6.2% YoY during the quarter. The net profit margins declined from 17.8% in 2QCY10 to 14% in 2QCY11.