After trading in strong positive territory for most of today's session, the benchmark indices came off the day's highs in the closing hours. However they still managed to hold onto some gains to close in the green. While the BSE-Sensex closed higher by around 68 points (up 0.4%), the NSE-Nifty closed higher by around 15 points (up 0.3%). Midcaps and smallcap stocks had a relatively weak outing, as the BSE Midcap and the BSE Small cap close pretty much flat. Losses were largely seen in power, and engineering stocks. Realty stocks saw significant gains.
As regards global markets, Asian indices all closed firm today while most European indices opened in the green. The rupee was trading at Rs 45.63 to the dollar at the time of writing.
Auto stocks closed weak with Hero Honda being the major loser on a disappointing set of numbers. Homegrown auto major, Mahindra & Mahindra (M&M) plans to launch 8-10 new products, in the fiscal ending March 2012. The company also plans to launch a premium sports utility vehicle (SUV) which will be priced above its 'Scorpio' brand. M&M has already invested around Rs 600 bn in developing its vehicle platform. However, M&M President and SIAM (Society of Indian Automobile Manufacturers) head, Pawan Goenka is of the opinion that auto sector growth rates of 30% and over cannot be sustained over the longer term. He expects growth to slow down to around 15-18%. Interest rates have been under pressure and various lenders including Bank of Baroda, HDFC, Oriental Bank of Commerce have all hiked their lending rates. This is post the RBI hiking key policy rates recently. Increasing commodity prices are also at play in addition to operational expenses (oil prices) increasing. Both these factors could contribute to a slowdown in growth.
Maharashtra Seamless recently announced its December quarter results. The company saw a 9% increase in its sales for the quarter (3QFY11), but for the 9 month period ended December 2010; the sales growth was muted at 2%. Volumes for both of the company's products viz. seamless pipes and ERW pipes were lower by 7% and 16% respectively on a YoY basis. To increase sales volumes, the company is intensifying marketing activities in its major export market – USA. It is also planning to enter the Canadian and Latin American markets. Margins saw a 2% contraction in the quarter. This was backed by an increase in staff costs and manufacturing expenses. On account of a lower effective tax rate, and lower depreciation charges net profit saw a 5% increased YoY in 3QFY11 and 23% increase in 9mFY11.
As per reports bilateral trade between India and the United States saw a huge 30% increase in the first 11 months of 2010 to reach US$ 45 bn. This shows a recovery in the trade relations between the two economies from the slowdown in 2009. Between January-November 2010 India exports to the US increased at a healthy pace of over 41%. On the other hand US exports to India grew by 17% YoY over the same period. The volatility in rupee dollar rates had also affected bilateral trade between the two nations in 2010.