Indices post a shaky finish

Tue, 30 Sep Closing

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The Indian equity markets lost ground in the final hours of trade. While the BSE Sensex today closed higher by just 33 points, the NSE-Nifty closed higher by 6 points. Midcaps and Smallcaps too posted a dull performance today. Both the BSE Mid Cap index and the BSE Small Cap index closed the day higher by 0.1%. Sectoral indices closed the day on a mixed note, with consumer durable stocks being the top gainers today.

As regards global markets, Asian indices closed on a mixed note today. The rupee was trading at Rs 61.61 to the dollar at the time of writing.

Textile stocks have closed the day on a mixed note led by the stocks of Welspun India and SRF. As per a leading business daily, India's apparel exports are poised to climb by about 10% this year. The case for India's textile industry has been made strong on the back of factors like increasing wages, political instability and concerns about workplace conditions in the other large textile exporting countries. It may be noted that textile exports from India are currently pegged at around 4.5% of world trade. And this is expected to move higher due to the above mentioned reason. In fact, as per reports, firms in the industry have already been seeing a surge in sales in the year to date.

Capital goods stocks have ended the day on a weak note. The stock of BHEL has lost more than 15% during the last month or so. While overall business sentiment has been quick to pick up pace since the general elections in May, the pace of actual activity on the ground for stalled and slow moving power projects has not been able to match up. This has weighed on the stock price of BHEL. The situation has been further exacerbated by the recent verdict of the Supreme Court which cancelled almost all the coal block allocations since 1993. This has set the stage for major upheaval in the power sector amongst others, and BHEL's stock has suffered as a result. However, these are short to medium term apprehensions which necessarily have to get sorted out over the longer term if the Indian economy is going to grow. And the stock markets, being as they are, have focused on these near term negatives. It would be pertinent to note here that the company's position in its industry remains quite strong. It recently won an order through international competitive bidding for setting up a coal fired supercritical thermal power plant. Significantly, this is the first ever project of 800 MW unit rating ordered in the country on an engineering procurement and construction basis, and indicates that the company has steadily been working at honing its technological prowess in its area of business. In fact, the company recently indicated that despite severe market shrinkage and stiff competition in the power equipment business, it has actually increased its market share from 68% in FY13 to an overarching 72% in FY14. It has also been able to remain profitable during a period in which most of its peers have been seeing large losses.