Markets nosedive in the final hour

Mon, 16 Aug Closing

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The Indian indices opened on a weak note and oscillated to either side of Friday's close for the larger part of today's session. However, in the final hours, selling activity across index heavyweights intensified and pushed the indices deep into the red. While the BSE Sensex closed lower by around 116 points (down 1%), the NSE Nifty lost around 35 points (down 1%). However, while the BSE Midcap closed marginally in the positive, the BSE Smallcap closed in the red. Barring FMCG stocks, selling was witnessed across sectors.

As regards global markets, Asian indices closed mixed today while European indices have also opened on a mixed note. The rupee was trading at Rs 46.88 to the dollar at the time of writing.

Steel stocks closed in the red today with the key losers being Sesa Goa, SAIL and Tata Steel. Tata Steel had announced its 1QFY11 numbers recently. The consolidated topline grew by 17% YoY during 1QFY11 due to significant turnaround in its European operations. European demand improved in sectors like automotive and aerospace, which resulted in higher selling prices. The improved demand conditions also resulted in an improved capacity utilisation in Europe. EBITDA margins turned positive in 1QFY11 primarily led by an 11% decline (as a percentage of sales) in raw material costs. Other income declined by 71% YoY during the quarter. Bottomline turned positive in 1QFY11 due to higher operating margins, lower interest cost and restructuring charges. On a standalone basis, the company registered a 17% growth in its topline and a 100% YoY growth in its bottomline during the quarter.

As per a leading business daily, pharma major Lupin is eyeing major expansions in emerging markets. This is in a bid to generate revenues from these regions to equal the combined sales of the US and Japan by 2018. At present, the US and Japan account for almost 45% of its overall revenues. The company's Asia, Africa, Middle East & Latin America (AAMLA) business division has developed a focused approach to establish on-shore presence in promising emerging markets. This is through the organic route, acquisitions or alliances. Brazil and Mexico appear to be top on the agenda. Having said that, the US and Japan will also continue to remain major growth drivers going forward. In the US especially, the company is reaping rich dividends by focusing on niche branded generics. The stock closed lower today.

As per a leading business daily, wholesale price-based inflation (WPI) fell to single digits at 9.97% in July, owing to decline in prices of certain food and non-food items. It may be recalled that the inflation was at 10.55% in June. While for April it was revised upwards to 11.14% from the provisional number of 10.16%. This spells good news for the RBI although it seems more likely that it will continue with its policy tightening measures for the time being. This is till such time that the inflation levels come within the comfort levels of the Indian central bank.