Mid and small caps remain in favour

Tue, 17 Aug Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

The Indian indices opened on a firm note and oscillated to either side of the dotted line for the larger part of today's session. However, in the final hours, buying activity in select index heavyweights helped the indices move closer to the dotted line. While the BSE Sensex closed marginally lower by around 2 points, the NSE Nifty lost around 4 points (down 0.1%). However, the BSE Midcap and smallcap indices closed in the positive, up by 0.6% and 0.3% respectively.

As regards global markets, Asian indices closed mixed today with India trailing the pack of losers. European indices have also opened on a mixed note. The rupee was trading at Rs 46.60 to the dollar at the time of writing.

The latest economic data released this week showed that the headline inflation number - the wholesale price index (WPI) rose an annual 9.97%. This is below the median forecast for a 10.39% rise and compared with June's rise of 10.55%. India's headline inflation, the highest amongst the G20 major economies, continues to remain the single largest concern for the government. In response to the high inflation, the RBI has raised it's the repo rate by 1% so far this fiscal and is widely expected to continue its calibrated tightening. Although the WPI for July has come in a tad lower, the same is expected to go back to double digits for the month of August once the impact of fuel price hikes get fully factored in. The government expects the WPI to come down to 6.5% by the end of this fiscal.

Aluminium producer Nalco declared its 1QFY11 results. The company reported a growth in topline of 40% YoY during 1QFY11. This was due to higher London Metal Exchange (LME) prices and production volumes. On the production front, the company recorded a higher bauxite production at 1.1 m tonne, against 0.8 m tonne in 1QFY10. Aluminium production increased to 0.11 m tonnes during 1QFY11 up from 0.1 m tonnes in the corresponding quarter previous year. The company's operating margin expanded to 30% during 1QFY11, up from 18% in 1QFY10 due to lower raw material, power and manufacturing cost (as a percentage of sales. World aluminium consumption is projected to grow at around 9% in 2010. Within India, the demand for aluminium continues to be strong from all the major consuming sectors, including electrical, transportation, buildings and construction sectors.

As per a leading business daily, given the insufficiency in gas supplies to power projects, the government is giving top priority to making available 581 MMSCMD (million standard cubic metres per day) of gas required by power projects in the country. Currently power projects in the country require 581 MMSCMD of gas, but the same is not available. Availability of this quantity of gas will enable power companies to generate 1,21,000 MW electricity. With the addition to power capacities falling grossly behind 5 year plan targets, the move seems pertinent. Power majors NTPC and Tata Power ended the day marginally lower.