While the indices came off the day's highs, it did manage to close marginally in the positive in what could be considered as a rather volatile session. The BSE Sensex closed higher by around 20 points today (up 0.1%), NSE Nifty could eke out gains in the region of 15 points (up 0.3%). Mixed trend was observed amongst BSE Midcap and Small cap indices whereby the former ended 0.2% higher while the latter witnessed a decline of 0.2%. The advance to decline ratio on the Sensex was quite evenly split, with there being one advance for every decline.
Amongst Asian indices, while most of them ended the day in the positive, European indices are also trading in the green currently. As for rupee, it was seen trading at Rs 46.27 to the dollar at the time of writing.
Today's gains break the six day losing streak of the Sensex where it lost in the region of 8%. However, the gains were more to do with global factors than local. Some doubts that had began to surface recently were finally put to rest yesterday. Obama's speech alleviated concerns with respect to his strict stance against financial companies while US Fed's comment that the US is in recovery mode also stoked investor enthusiasm. All in all, the general feeling was that it is business as usual and policymakers would continue to act in a synchronous manner to ward off any crisis that stares them in the face. Just the kind of assurances stock markets need in these uncertain times.
Dr.Reddy's led the pack of gainers among pharma stocks notching 4% gains. The company has done well ever since the rally began in March 2009 although its performance in 3QFY10 was lukewarm. During the quarter, sales had dipped 6% YoY due to lower sales in the US and Europe. However, the company did well on the profitability front, with net profits (excluding the extraordinary item related to Betapharm) growing at a robust pace due to significant reduction in interest costs. As far as the overall business is concerned, the key growth drivers will continue to be the US, India, the emerging markets and the custom manufacturing business. In the US especially, its focus on niche products with limited competition will enable it to segment sales from this highly competitive generics market. The future of Betapharm, however, in the medium term looks hazy due to uncertainty with respect to how the dynamics of the German generics market play out and significant price erosion.
Engineering stocks were amongst the worst performers today. Major losers included L&T, Praj, and Alstom Projects. Crompton Greaves, that announced its 3QFY10 results a short while ago, ended as the biggest gainer from the sector. On a consolidated basis, the company has recorded a stupendous 62% YoY growth in net profits during the quarter. This comes largely on the back of a sharp improvement in operating margins, as sales grew by just around 4% YoY during the quarter. What is more, the company has declared a RS 1.4 per share dividend and a 3:4 bonus issue (3 new bonus shares for every 4 shares held).