Profit booking takes toll

Tue, 20 Nov Closing

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Indian equity markets began the day's proceedings on a positive note. However, subsequent hours saw the indices pare some gains. The afternoon session was witness to selling pressure intensifying as a result of which the indices moved into the red. There was some recovery seen in the final trading hours but it was not enough to push the indices above the dotted line. While the Sensex today closed lower by 10 points, the NSE-Nifty today closed flat. The BSE Mid Cap and the BSE Small Cap were not spared either as they lost 1% each. Barring auto and consumer durables stocks, losses were seen across sectors.

As regards global markets, Asian indices closed mixed today while most European indices have opened in the red. The rupee was trading at Rs 55.07 to the dollar at the time of writing.

Most engineering stocks closed in the red today with the key losers being Voltas, Thermax and L&T. As per a leading business daily, Larsen & Toubro (L&T) has secured orders worth Rs 25 bn. Its infrastructure division has bagged an order valued at Rs 20 bn from GVK Project and Technical Services. L&T will execute the major portion of the work for the 850 MW Hydroelectric Power Project located in the Kishtwar district of Jammu & Kashmir. The company's buildings and factories division has received orders worth Rs 3.9 bn for the construction of a commercial building in Mumbai. The water and effluent treatment business received an order worth Rs 1.2 bn from the Public Health Engineering Department of the Rajasthan for water supply works in Fatehpur - Laxmangarh, Rajasthan. It must be noted that in 2QFY13, L&T grew its standalone sales by around 17.4% YoY. This was on the back of a 19.1% YoY growth in the company's Engineering & Construction (E&C) division. However, revenues from the Machinery & Industrial products (M&I) division declined 8.8% YoY. Nonetheless, revenues from the Electrical and Electronics (E&E) division were flat at 3.8% YoY. Despite execution issues prevailing in the sector, revenue growth posted by the E&C segment was highly commendable. Even the order inflow of Rs 191 bn, up 31% YoY was healthy. The growth in the order book predominantly came in from the transportation, urban and water infrastructure sectors. Due to overall diversity in the order book, the execution issues have not impacted the top line growth.

Bharat Petroleum Corporation Limited (BPCL) recently announced results for the second quarter ended September 2012. For the quarter, sales were up by 34.5% YoY. For the first half year (1HFY13), the sales registered 26% YoY increase. At operating income level, the company booked profits worth Rs 53.9 bn (versus a loss of Rs 27.6 bn 2QFY12) with operating profit margins at 9.5% versus a loss margin of 6.5% in 2QFY12. For the first half, the operating losses were down to Rs 27.6 bn from Rs 49.1 bn in 1HFY12. The operating loss margin for the first half of the year stood at 2.5%, better than the loss margin of 5.5% in 1HFY12. The net profits for the quarter stood at Rs 50.3 bn (versus a net loss of Rs 32.3 bn) with margins at 8.8% (as compared to net loss margin of 7.6%). For the first half year, the net loss margins stood at 3.4% as compared to 6.5% in 1HFY12. The crude thruput for the quarter stood at 5.94 million metric tonnes (versus 5.91 MMT in 1QFY13), up from 5.58 MMT in 2QFY12. For 1HFY13, the crude thruput increased to 11.85 MMT from 10.78 MMT in 1HFY12. The market sales for the quarter stood at 7.77 MMT (versus 8.5 MMT in 1QFY13), up from 7.04 MMT in 2QFY12. The market sales for 1HFY13 stood at 16.3 million metric tonnes (MMT) as compared to 14.9 MMT in 2QFY12.This was mainly due to increase in sales volumes of MS Retail (up 6.7%), HSD - Retail (up 14.6%), RLNG (up 28.1%) and LPG (up 4.9%) partially offset by a decline in sales volumes of Furnace oil (down 5.1%). The average gross refining margins for 1HFY13 stood at US$ 4.55 per barrel as compared to US$ 1.42 per barrel in 1HFY12. BPCL has accounted a compensation of Rs 72.8 bn (up 44.1% YoY) from upstream companies for the purchase of crude oil. It has accounted a compensation of Rs 72.4 bn (almost double of what it received in 1HFY12) from the Government for losses on the sale of sensitive petroleum products. The net under recoveries for 1HFY13 stood at Rs 61.3 bn, down 6.8% YoY. For 1HFY13, the thruput at Bina refinery stood at 2.5 MMT with GRMs at US$ 4 per barrel (GRMs at US$ 7.7 per barrel for the quarter). The stock closed lower today.