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RBI adds to the weak sentiment
Tue, 25 Jan Closing

Markets weakened further doing the closing hours and thus ended the day deep in the red. BSE-Sensex edged lower by around 180 points today whereas NSE-Nifty closed with a loss of around 55 points (down 1%). BSE Midcap and BSE Small cap indices did not do all that well either and lost in the region of 0.4% each. Two stocks declined for every stock that ended higher on the Sensex today.

As far as other Asian indices are concerned, most of them closed the day in the positive while European indices are trading mostly in the red. The rupee was trading at Rs 45.7 to the dollar at the time of writing.

Although the markets did close significantly in the negative, they did not languish in the red throughout the day. In fact, they were trading well above breakeven till the time of the RBI announcement. Perhaps investors were expecting the central bank to maintain the status quo. But the RBI did not play as per the script and instead dished out another rate hike, a step likely to throw one more spanner in the wheels of India’s near term economic growth. Furthermore, with the results season too failing to show any spark of note, markets had no other option but to be southbound.

HUL, the FMCG behemoth ended up being one of the top losers on the Sensex today as the stock price slid in the region of 6%. Investor displeasure was perhaps on account of the below par performance from the company in the December quarter. HUL reported a drop in bottomline to the tune of around 2% although its topline grew by 12% YoY. The decline in bottomline was mainly on account of lower operating margins, which fell by more than 3% and led to an 8% drop in operating profits. For the nine month period, profits were higher by 7% YoY on the back of a topline growth of 11% YoY. Coming back to the topline growth during the quarter, company’s home and personal care business grew by around 12% YoY whereas food business registered a growth of more than 11% YoY. However, company’s expenditure in purchase of these various goods increased and it was unable to pass it on fully, resulting into margin contraction.

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