Markets up 0.7% for the week

Fri, 2 Nov Closing

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The closing hours saw the Indian equity market indices come off a bit from their day's highs but still close the day firmly in the positive. Thus, while BSE-Sensex edged higher by around 194 points, gains on the NSE-Nifty came in at around 53 points (up 1%). BSE Mid Cap and BSE Small Cap indices also participated in the rally, gaining around 0.4% each respectively. From the Sensex, only around 4 stocks closed the day in the red, with the rest closing higher.

The rupee was trading at Rs 53.8 to the dollar at the time of writing. Amongst other indices, while Asian ones closed in the red, Europe too was trading mostly in the green.

The gains today singlehandedly took the markets to a positive ending for the week. In fact, had it not been for today's rise, indices would have closed slightly in the red. The auto sector has been in sublime form all of this week and today was no exception. Strong auto numbers despite the overall tepid environment is triggering interest in the sector counters we believe. Capital goods and bank stocks also gave good company to the auto space.

Steel Authority of India (SAIL), India's largest PSU steel maker edged higher by around 2% today. The company, as per reports, is looking to expand its production capacity to 18 m tonnes from existing 14 m tonnes by the end of the current financial year. It should be noted that the firm is in the midst of a massive expansion programme, involving an outlay of close to Rs 720 bn. It is believed to have already spent Rs 390 bn towards the same. The company has set itself a long term target of achieving a capacity of 45 m tonnes by 2020 and in the process, accounting for 30% of the market share of Indian steel industry. SAIL's follow on public issue is going through rough weather currently with valuations being the bone of contention.

Marico announced its September 2012 quarter results today. The company recorded 19% growth in revenues driven by 14% rise in volumes. All the three business units registered healthy growth in turnover for the quarter. The domestic consumer business grew by 19% whereas the International business posted growth of 16%. The Kaya business segment grew by 38% led by same store growth of 10% in India and Middle East.

The company has been able to expand operating margin by 70 basis points to 13% during the quarter on the back of a 6.8% reduction in the cost of goods sold to sales ratio. Brand investments continued to remain high as reflected in the 4.5% jump in the ad-spend to sales ratio. Only the domestic consumer business saw a 50 basis points improvement in its EBIT margin. The skin care business turned in the black clocking EBIT of Rs 57 m. Earnings grew by a relatively subdued 10% due to over 40% escalation in each of the interest charges and tax outgo. The other income earned slumped by 59% during the quarter. The stock took a loss of nearly 5% on the bourses today.