Failing to recover from the strong bouts of profit booking seen since the start of the session today, the benchmark indices languished in the red and closed well below the dotted line in today’s trade. While the BSE Sensex closed lower by around 253 points (down 1.5%), the NSE Nifty lost around 87 points (down 2%). Midcap and smallcap stocks also felt the pressure and their benchmark indices shed around 2% each. Energy stocks were the only ones to gain on the back of hopes of a change in fuel pricing mechanism.
As regards global markets, most Asian indices closed lower today while European indices also opened in the negative. The rupee was trading at Rs 46.21 to the dollar at the time of writing.
In a measure to accelerate its financial inclusion drive, the RBI has requested PSU and private sector banks to offer overdraft loan facility in addition to no-frills accounts in under-banked areas.
The RBI has also sought a three-year roadmap on the extent of financial inclusion that banks plan to achieve by March 2011. The central bank has, however, clarified that it would not impose any uniform model on banks for financial inclusion but allow them to develop their own strategy in line with their competitive advantage. We believe that this would be an ideal way to ensure financial inclusion. It would not lead to banks sacrificing on their profitability and at the same time ensure sufficient inclusiveness. Profit booking was witnessed in banking stocks across the board today.
Meanwhile, Indian software industry body NASSCOM believes that the sector will take a couple of years more to recover from the global economic slump. NASSCOM has projected export revenues to grow by 13% to 15% YoY to US$ 57 bn in 2010, below the previous outlook of US$ 62 bn. The growth rate in the current fiscal would be 5.5%, within the 4-7% expansion projected earlier. NASSCOM believes that although software companies in Asia are leading the IT service exports as companies in US and Europe restart their technology spend, growth will be lower than earlier estimates. Software majors including Infosys, Wipro and TCS failed to garner investor interest today.
Cement major ACC announced its full year CY09 results today. The company reported 10% YoY growth in revenues during CY09. The growth has largely been backed by improved realizations during the past few quarters. Stable cost of operation and improved realisations led to 43% YoY growth in operating profits for the company. Despite lower other income, growth in bottomline stands at 33% YoY. This is mainly on account of good show at the operating level. Excluding extraordinary income reported in CY08, net profit growth stood at nearly 38% YoY for CY09. The stimulus package announced by the government to boost construction activity is expected to keep the company’s volume offtake consistent. However, realizations are expected to come under pressure in the medium term as more capacities come on stream.