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RBI does not come to the rescue
Tue, 30 Oct Closing

Selling activity in equity market of India intensified during the closing stages. This resulted in the BSE-Sensex ending significantly lower by around 205 points (down 1.1%). Decline on the NSE-Nifty stood at around 70 points. BSE Mid Cap and BSE Small Cap indices also performed poorly, losing 1% and 1.3% respectively. Nearly three stocks went down for every one that gained on the Sensex today.

While Asian stock markets closed with a positive bias today, Europe is trading mostly in the green currently. The rupee was placed at Rs 54 to the dollar at the time of writing.

Today's decline had mostly to do with the stubborn stance adopted by India's central bank of keeping the rates unchanged. Besides, its forecast of still higher inflation and lower GDP growth also did not go down well with investors. While a dampener in the short term, we believe that Reserve Bank of India (RBI) measures are certainly the right recipe for sustained growth in the long term. Thus, long term investors need not worry and take advantage of this short-termism of the market by investing into fundamentally good stocks should their valuations come down to attractive levels.

Maruti Suzuki, India's largest manufacturer of passenger vehicles, announced its quarterly results today. Net profits of the company were down 5% YoY mainly on account of deadly strike at its Manesar plant, which affected production for a month or so. Important to add that this is the fifth consecutive quarterly decline in profits that the company has experienced. Its topline however grew by a reasonable 8.2% on a YoY basis. EBITDA also increased by a good 15% YoY with margins coming higher by 0.4%. The stock closed higher by 2% on the bourses today.

Shriram Transport Finance Company also announced its results today. Its net profits grew by 13% YoY on the back of a 9% increase in topline. Its consolidated profits on the other hand were up 16% YoY on a topline growth of close to 12%. Important to add that the company does not see much stress in terms of asset quality trends in the CV financing space and hopes to maintain its gross NPAs at around 3% of the overall portfolio. The stock closed higher by around 1% on the bourses today.

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