Indian indices witness volatility

Tue, 3 Aug Closing

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The Indian indices remained largely volatile throughout the day due to alternate bouts of buying and selling witnessed across index heavyweights. Despite this the indices managed to trade in the positive for the larger part of the day to close above the dotted line. While the BSE Sensex closed higher by around 34 points (up 0.2%), the NSE Nifty gained around 8 points (up 0.2%). The BSE Midcap and BSE Smallcap also closed higher by 0.3% each. Oil & gas and banking stocks witnessed gains, while IT and FMCG stocks were at the receiving end.

As regards global markets, Asian indices closed mixed today while European indices too are witnessing a mixed trend currently. The rupee was trading at Rs 46.16 to the dollar at the time of writing.

GAIL had announced its 1QFY11 results. The company's topline grew by 18% YoY. Its bottomline grew by 35% YoY during the quarter despite a subsidy payout of Rs 4.45 bn (Rs 750 m in 1QFY10). The strong performance was attributed to higher volume of natural gas transmission, higher production of liquefied natural gas and liquid hydrocarbons. The company has outlined Rs 400 bn capital expenditure plan for the next three years. While Rs 235 bn of this will go towards doubling the company's pipeline capacities, the balance amount will be spent on petrochemical, city gas and energy exploration projects. GAIL will use a combination of debt and equity to fund its future projects. Further, the company has unveiled plans of bringing in a bond issue of Rs 5 bn early next year. The stock closed lower today.

As per a leading business daily, IT major Wipro has bagged a deal with the government to develop software for digitising its crime and criminal tracking network system under the national e-governance plan. As per the deal, the company will link 14,000 police stations and 6,000 police offices across the country for tracking crime records on real-time basis in digital format. However, the cost of the project and the potential revenues from the same has not been divulged. It must be noted that in 1QFY11, Wipro's sales had grown by around 4% QoQ driven by a 5% QoQ growth in the IT services business, which accounts for 76% of total sales. The stock closed lower today.

Hotel stocks closed firm today and the key gainers here were Oriental Hotels, Hotel Leelaventure and Taj GVK. As per a leading business daily, leading companies in the hotels sector are contemplating an increase in room rates in September. This is on the back of significant improvement in occupancy levels in the past few quarters. Higher business confidence and revival in corporate as well as domestic leisure travel has pushed up occupancy levels. These have now stabilized at around 70% and have made the case for an increase in room rates stronger. Besides Bangalore, revival has begun in Mumbai and Delhi as well and there are expectations of an 8-10% growth in average room rates (ARRs) in the third and fourth quarters of this fiscal in most markets. At the same time, supply of rooms has also increased and so whether the hotel industry does end up hiking rates remains to be seen