Largecap stocks bear the brunt

Wed, 6 Aug Closing

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The Indian equity markets continued their losing streak, slipping to lower levels during the latter half of the day. While the BSE Sensex today closed lower by by 243 points, the NSE-Nifty closed lower by 75 points. Midcaps and Smallcaps however ended the day with lower declines. While the BSE Mid Cap index closed lower by 0.8%, the BSE Small Cap index closed the day lower by just 0.2%. Banking and metal stocks were the biggest losers today.

As regards global markets, Asian indices closed on a negative note today, with the Japanese and Malaysian markets seeing the biggest declines. The rupee was trading at Rs 61.33 to the dollar at the time of writing.

Steel stocks have ended the day on a weak note. Tayo Rolls and Jindal Saw Ltd closed with marginal gains while Bhushan Steel lost 20% as the company was named in the Syndicate Bank bribery issue. Tata Steel is ramping up its capacity in England in order to meet rising customer demand. Currently, its nominal capacity is 170,000 tonnes per year from the English plant where it is planning expansion. Teeside facility at Redcar is where the company is planning to undertake expansion. Tata Steel has already invested GBP 8.5 m in this facility. With the installation of new equipment at the plant the production is likely to get a boost. The facility manufactures products that serve wide variety of construction and infrastructure projects. The company has also opened another warehouse there and installed various equipments that shall reduce handling time and costs and thereby improve efficiency.

Retailing stocks ended the day on a weak note with Provogue and Future Retail closing with the biggest declines. Titan Company has announced its results. The company's net sales fell by 7.6% YoY during the quarter. Segment wise, jewellery revenue fell by 10.1% YoY; Watches segment grew by 10.4% YoY. The seemingly poor performance in the jewellery segment was due to the high base effect of the same quarter in the previous financial year wherein the segment had witnessed a 47% growth in sales when gold prices had fallen sharply. 'Others' segment which includes precision engineering, eyewear and accessories grew by a marginal 3.8% YoY. Total raw material cost as a percentage of sales this quarter have decreased from 78.4% in 1QFY14 to 75.7% in 1QFY15. This has led to decrease in operating expenditure by 8.6%, which is more than the fall in sales. Due to lower operating expenditure, operating profit has increased by 5.1% YoY despite a fall in top line. As a result, EBITDA margin has increased to 8.3% YoY in 1QFY15 from 7.3% in the corresponding quarter of previous year. While deprecation cost grew by 66.6% YoY, Interest cost grew by 105.3% YoY during the quarter. Impacted by substantial increases in depreciation and interest costs, profit after tax fell by 2.9% YoY during the quarter.