Volatility hits Indian indices

Mon, 5 Dec Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Indian stock markets languished in the red for the larger part of the trading session today on the back of relentless selling pressure across heavyweights. Although there were some attempts made in the afternoon session to push above the dotted line, these were short lived as profit booking once again took toll. There was no respite in the final trading hour as well and the indices closed into the red. While the BSE-Sensex closed lower by around 42 points (down 0.3%), the NSE-Nifty closed lower by around 11 points (down 0.2%). The BSE Mid Cap index closed flat, while the BSE Small Cap index managed to buck the trend and close into the positive. Losses were largely seen in FMCG , healthcare and metals stocks.

As regards global markets, Asian indices closed mixed today while the European indices have opened in the green. The rupee was trading at Rs 51.28 to the dollar at the time of writing.

As per a leading business daily, firms from the infrastructure sector have been bogged down by a slowdown in orders and rising interest costs. That is why many of them are looking to scale down targets, cut costs, as well as evaluate options to divest holdings in projects and real estate assets. Many of them are also looking to de-leverage their balance sheets given that on an average debt levels of infrastructure companies have gone up 10% in the last two quarters. Working capital situation has also deteriorated in the past 6 months. High interest rates have only added more fuel to the fire. Orders from the central and state government authorities in areas like urban infrastructure, water and the like have been hit by slow decision making by the government. In the power sector, orders have fallen due to uncertainty over availability and pricing of fuel and higher borrowing costs. Thus, some efforts to trim costs and debt will enable companies from this sector to weather the storm better. Both Iragavarapu Venkata Reddy Construction Limited (IVRCL Ltd) and Hindustan Construction Company) (HCC) closed higher today.

Auto stocks closed mixed today. While Mahindra And Mahindra (M&M) and Maruti found favour, Bajaj Auto and TVS Motor closed in the red. As per a leading business daily, auto major Ashok Leyland has posted robust sales growth for November 2011. Overall sales volumes were up 53% YoY during the month. While sales from the domestic market rose by 67% YoY, exports during the month grew by 12% YoY. It must be noted that this was a reversal in trend to what was observed in 1HFY12, when the 10% YoY growth in sales (in value terms) was largely led by healthy growth in exports as compared to domestic sales. Operating margins during the period, however, had dipped on account of a rise in staff costs and other expenditure (as a percentage of sales).The stock closed higher by 5% today.