Sensex closes the week 0.5% higher

Fri, 24 Aug Closing

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The Indian stock markets started the day below the dotted line today. They continued to trade weak for the rest of the session. The previous close was not breached for the entire session and crossing the 18,000 level still remains elusive for the BSE-Sensex. All in all, the index gained 0.5% during the week. However, the day ended on a negative note. The market breadth was more negative with 1.7 declines to every advance. The BSE-Sensex closed negative, lower by around 67 points (down 0.4%), the NSE-Nifty also closed lower by around 29 points (down 0. 5%). The smaller indices also had a weak day on the bourses. The BSE Mid Cap index and the BSE Small Cap closed 0.6%and 0.8% lower respectively in trade today. Interest rate sensitive stocks such as realty and banking saw a bulk of the losses today. This was on account of the Reserve Bank of India's statement that lower interest rates may not be enough to jumpstart the economy. The Oil and gas and auto indices both saw losses today. Healthcare and FMCG stocks led the gains.

As regards global markets, Asian indices had a negative outing today. European indices opened the day on a mixed note. The rupee was trading at Rs 55.49 to the dollar at the time of writing.

Mahindra & Mahindra (M&M), the world's biggest tractor maker by volume cut its sales growth forecast of farm equipment in India. The company had a market share of 39% in this segment in FY12. This is as the worst rainfall in three years delays crop sowing in the country. The company expects industry sales to expand as little as 2% in FY13. Pawan Goenka, the president of the automotive and farm equipment division had earlier estimated sales to rise as much as 10% for FY13 after growing by 22% last fiscal. Deliveries of the farm equipment make up 22% of Mahindra's sales in FY12.Credit rating agency, ICRA also estimates tractor sales growth may be flat at 625,888 units in FY13 after seeing a11% growth in FY12.

Rain was deficient or scanty in 45 percent of the country, according to the India Meteorological Department. For tractor dealers in western Indian states such as Maharashtra, the drop in sales may be larger after a 30% rainfall deficit since June 1. The area under monsoon crops in India, the world's second-largest producer of rice and wheat, dropped 6.2% as of Aug. 17, according to data from the farm ministry. On account of scanty monsoon, the inflation forecast for the year has been raised to 7% from 6.5% previously by the Reserve Bank of India. M&M closed the day over 1% lower.

Coal India proposed in its latest (FY11-12) annual report to buy back shares. This cannot be done under its current Articles of Association. This proposal will be issued to shareholders during its Annual General Meeting (AGM) on September 18. The company has more than Rs 500 bn in cash and cash equivalents as of June 30, 2012. It earns half of the net profit due to other income in the form of yields on this cash. On the back of this news, which is a positive for shareholders, the stock over 2% higher in trade today.