The Indian markets had a volatile session during the previous two hours of trade. Most of the sectors are trading in the red led by metal and IT stocks. However, select stocks from the capital goods sector are managing to garner investors' interest.
The BSE Sensex and NSE Nifty are trading in the red, down by 140 points and 30 points respectively. The BSE-Midcap and BSE-Smallcap are also trading down by 1.1% and 1.4% respectively. The rupee is trading at 46.36 to the dollar.
The Indian central bank released its third quarter review of Monetary Policy a while back. Not willing to let loose the inflationary spiral, the central has come down pretty sternly on the excess liquidity floating around in the system. The instrument used has been the CRR or the cash reserve ratio. This ratio at which banks maintain cash with RBI (as a percentage of their deposits) has been hiked by 0.75%. It is meant to suck out liquidity to the tune of Rs 360 bn. The hike, will in two stages, bring the CRR from 5% currently to 5.75% by the end of February 2010. As for the challenges that the RBI foresees for the economy, fiscal deficit tops the list. The bank is also hoping for the government to phase out some of the stimuli offered to pump prime the economy. The Union Budget 2010-11 is expected to throw more light on this. Meanwhile, the RBI has also raised its GDP growth projection for 2010 to 7.7%.
Engineering major Crompton Greaves announced its 3QFY10 results yesterday. Its consolidated sales grew by 4.5% YoY during 3QFY10, led by a strong performance from the 'consumer products' business, which recorded a growth of 27% YoY. Operating margins expanded substantially by 3.7% YoY. This improvement was aided by a big drop in raw material costs (as a percentage of sales). On the back of improvement in operating margins, substantially lower interest expenses and higher other income, the company's profits surged by 62% YoY during the quarter. its performance during 9mFY10 was almost similar as profit rose by 51% YoY despite a tepid sales growth of about 6% YoY. The company has declared an interim dividend of Rs 1.4 per share. It has also recommended an issue of bonus shares in the proportion of 3:4. The stock of Crompton Greaves is currently trading lower on the bourses.