Dull start to the week

Mon, 4 Oct Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Spurts of buying activity notwithstanding, benchmark indices continued their downward spiral from the day's highs during the closing hours of trade. Consequently, the Sensex closed just above the breakeven mark, ending higher by around 30 points (up 0.2%). NSE Nifty gained in the region of around 16 points (up 0.3%). BSE Midcap and small cap indices performed better than their large cap counterparts as they closed higher by 0.7% and 0.3% respectively. On the Sensex, advances to declines were neck and neck, with one stock declining for every one that closed positive.

Most Asian indices closed positive today whereas Europe has opened on a negative note. The rupee was trading at Rs 44.6 to the dollar at the time of writing.

The Indian markets seem to be getting some much needed breather right now after weeks of strong buying. Investors are also acting cautious ahead of the results season scheduled to start by next week. The way the Indian economy has been behaving, looks like the companies are in for some good time as far as the topline growth is concerned. However, with inflation continuing to be in the uncomfortable zone, profitability is likely to come lower than expected.

Bajaj Auto, India's second largest manufacturer of motorcycles, ended the day lower by around 1%. The drop in share price was despite the company reporting robust sales numbers for the month of September. During the month, the company's overall sales grew by 26% YoY, an impressive number by any stretch of imagination. However, what must have disappointed investors is the fact that the company may not be able to build up on good September numbers for the next couple of months as it has run into capacity constraints. As per the company's management, in terms of retail sales, October and November will be ahead of September but in terms of company sales, it will be perhaps in the same neighbourhood. The capacity constraint though is not likely to persist for long as the company plans the next big step of taking up the capacity to around half a million units by March end.

Steel stocks closed strong today with leading gainers being Bhushan Steel, JSW Steel and SAIL. Close on the heels of announcement of price hikes by some domestic steel manufacturers, comes another good news on the demand front. As per the World Steel Association, world steel demand is expected to go up by 5.3% in 2011 on account of stronger than expected demand in Europe and other developed economies and continued strong demand in emerging nations. However, the association has cautioned that the withdrawal of government stimulus measures and volatile exchange rates could cloud the outlook. China is yet again going to be the dominant force, accounting for nearly 45% of the global demand. India too, is not likely to be far behind in terms of growth numbers, as its demand is expected to go up by higher single digit to lower double digit in the medium to long term.