Volatility plagues Indian indices

Tue, 15 Feb Closing

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Markets had a rather volatile outing today as they oscillated to either side of yesterday’s close. The morning session saw early gains being eroded as selling pressure pushed the indices into the red. However, buying activity at lower levels intensified in the ensuing hours and nudged the indices above the dotted line. The final trading hour saw the indices close in the positive. While the BSE-Sensex closed higher by around 72 points (up 0.4%), the NSE-Niftyclosed higher by around 25 points (up 0.5%). While the BSE Small cap closed firm (up 1%), the BSE Midcap was at the received end as it closed lower by 0.2%. Gains were seen in auto and banking stocks.

As regards global markets, Asian indices closed mixed today while European indices have also opened on a mixed note. The rupee was trading at Rs 45.49 to the dollar at the time of writing.

OBC declared its 3QFY11 results. The bank's interest income grew 17% YoY in 9mFY11 on the back of 16% YoY growth in advances. OBC managed to grow its business in line with the average growth in the sector. OBC has lowered the proportion of retail credit to 8% of its total advance book, with the same de-growing by 12% YoY to accommodate more corporate assets. The same seem to have helped improve the bank's net interest margins by 0.1% bringing the same to 3.1% and in line with the sector average. Bottomline grew by 43% YoY in 9mFY11 despite lower non fund income. Net non-performing assets (NPA) declined to 0.9% of advances in 9mFY11 from 0.8% in 9mFY10. Capital adequacy ratio stood at 12.3% (as per Basel II) at the end of 9mFY11. The stock closed higher today.

Cement stocks closed firm today with the key gainers being Mangalam Cement, Madras Cements and Shree Cement. As per a leading business daily, the cement industry is looking for an export subsidy from the government of around 50% to overcome the surplus situation created by capacity additions. It must be noted that although India produces cement of international standards it is not competitive mainly on account of high level of taxes and duties imposed on it. Cement companies have added capacity of 89 mm tonnes (MT) in the last three years. This has taken their installed capacity to 265 MT per annum. Moreover, the companies are expected to add 35 MT of capacity by FY13. As a result, realisations are expected to remain under pressure going forward.