Indices end 4.5% higher for the week

Fri, 30 Nov Closing

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Having started the session on a firm note today, the indices in Indian stock markets managed to resurge after a brief period of profit booking. Overall the markets had a very good week with the BSE-Sensex closing the week a 4.5% higher. The BSE-Sensex closed positive, higher by around 169 points (up 0.9%). The NSE-Nifty also closed higher by around 54 points (up 0.9%). The smaller indices also had a good day on the bourses. The BSE Mid Cap index closed 1.1% higher and the BSE Small Cap closed 0.8% higher in trade today. Metal and power stocks saw a bulk of the gains today. Auto and FMCG stocks however saw some losses.

As regards global markets, Asian indices had a mixed outing today. European indices opened the day on a mixed note. The rupee was trading at Rs 54.36 to the dollar at the time of writing.

GDP growth data came in today which showed that the Indian Gross Domestic Product (GDP) grew at 5.3% versus 5.5% in the first quarter of the current financial year. The economic growth in the first six month of this fiscal (April-September) is 5.4%, lower than 7.3% growth clocked in the year-ago period. Economists and policy watchers are apprehensive about growth prospects going forward, however the central bank has plenty of room to stimulate the economy through rate cuts.

Siemens India plans to cut capital expenditure as it is faced with a double whammy of depleting order inflows and falling profits. The company reported a loss of Rs 55 crore in the July-September quarter, against a profit of Rs 1.8 bn during the same period last year. Annual profit was down 50%. The company's order inflow declined 17% last year and revenue and margins were impacted due to project delays and cost over-runs. Faced with economic uncertainty the company has started its own cost reduction programme. The company plans to implement a number of measures to trim costs, strengthen core business activities, improve sales, and optimise the use of its facilities in line with the parent company's strategy. It plans to focus on its low-cost and high-technology 'SMART' products, which contributed 15% of the order intake. This was compared to a 10% in FY11 and 5% in FY10.

Lenders are set to take a final call on beleaguered carrier Kingfisher Airlines (KFA). With no other viable option left lenders need to settle their outstanding dues with the Vijay Mallya owned airline. It has been almost a year since the loan account slipped into the sub-standard category, the first level of non-performing assets (NPAs). Banks will now have to start treating it as as a doubtful asset, the second level of NPAs. This will raise the provisioning requirement from 15% to 30%. A consortium of 17 lenders loaned around Rs 80 bn to KFA. The value of collaterals has sharply decreased and banks cannot hold onto this exposure forever. Moreover, KFA has not yet provided any enhancement of securities.