Mid and Small Caps outperform

Thu, 1 Nov Closing

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Indices in the equity market of India stayed close to the breakeven line even during the closing stages of the day. Consequently, they ended the day only marginally higher. While Sensex today gained around 55 points, NSE-Nifty gained in the region of 25 points. BSE Mid Cap and BSE Small Cap indices were the better performers today, edging higher by 0.9% and 0.8% each respectively. Nearly two stocks gained for every stock that closed the day either flat or in the red on the Sensex today.

While Asian indices closed mixed today, Europe too was exhibiting a similar trend. The rupee was trading at Rs 53.7 to the dollar at the time of writing.

Just like yesterday, today's gain too wasn't all encompassing and involved only a few sectors like auto and health care. While consumer durables index gained the most, it was mainly on account of robust gains in Titan Industries, which has a pretty large weight in the total index. FMCG and energy stocks suffered the most with both ITC and Hindustan Unilever Ltd (HUL) that account for nearly three fourth of the index, ending on the losing side. Just like the past two days, the next few sessions too would be bottom up oriented as per us as there does not seem to be any big macroeconomic event on the horizon.

GSK Consumer, India's largest producer of malted beverages, has put up a good show for the quarter ended September 2012. The company's profits are up 25% YoY on the back of a 15% growth in topline. The superior bottomline performance could be attributed to expansion in operating margins that saw operating profits grow by 20% YoY. The fall in depreciation charges also contributed to the improved bottomline show. The nine month performance has not been very different either with profits growing by 24% YoY on the back of a 14% growth in topline. The stock closed higher by 1% on the bourses today.

Also closing higher was Larsen & Toubro, India's largest engineering firm. The positive sentiment was a result of reports that the company's construction arm has bagged orders worth Rs 10.6 bn across various business segments during the month of October 2012. These include an order worth Rs 3.2 bn for construction of an IT campus and another few from the water and effluent treatment segment totalling close to Rs 4 bn. Further, the power and transmission & distribution segment also accounted for around 1 bn worth of orders. Thus, the strong order book accretion trend even during current difficult environment is a positive for the firm we believe.