Volatility plagues Indian indices

Fri, 5 Mar Closing

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The indices began the day on a robust note but as the day progressed profit booking at higher levels took its toll. From thereon, the indices oscillated to either side of yesterday's close. However, towards the fag end of the session, renewed buying activity ensured that the markets closed barely above the dotted line. While the BSE Sensex closed higher by around 8 points, the NSE Nifty also gained around 8 points. The midcap and small cap stocks did better to notch gains of 1% each. Gains were largely seen in oil & gas, FMCG and healthcare stocks while metals stocks were at the receiving end.

As regards global markets, Asian indices closed firm today while European indices have also opened on a strong note. The rupee was trading at Rs 45.68 to the dollar at the time of writing.

Software stocks closed mixed today. While Infosys and Tech Mahindra found favour, Wipro and TCS closed in the red. As per a leading business daily, Indian IT major Wipro has entered into a 7 year strategic agreement with the US based insurance firm Main Street America Group for software solutions. As per terms of the deal, Main Street will engage with Wipro for applications, development, maintenance and quality assurance. Wipro will supplement Main Street's IT organisation in its aim to support its present and future business needs. However, the size of the deal has not been disclosed. It must be noted that Main Street provides commercial, personal and surety insurance products to individuals, families & small businesses in 24 states of the US.

We believe that this is a positive for the company and will further enhance its revenues from its application, development and maintenance business. It must be noted that this service offering accounted for around 29% of Wipro's total revenues during 3QFY10 and grew by 3% QoQ.

As per a leading business daily, OVL (the overseas arm of ONGC) is scouting for oil and gas assets in the African continent. The countries on the radar include Sudan, Congo, Nigeria, Libya, Ghana, Angola, Egypt and Uganda. The estimated total investment in Africa for the current financial year up to January 2010 has been Rs 7.2 bn. It must be noted that OVL already has 11 projects at present in Africa, notably in Sudan, Nigeria, Libya and Egypt. Given that India imports around 70% of the oil that it consumes, Indian energy companies are increasingly looking overseas to augment their oil assets in a bid to meet the energy needs of India. The stock of ONGC closed lower today.

Tata Motors emerged as the top loser on the bourses today closing lower by 2% as investors chose to book profits in a stock which has run up considerably. No doubt, the company did well during 3QFY10 wherein sales grew by 47% YoY. Not just that, it reported a profit of Rs 6.5 bn as against a loss of Rs around 26 bn in 3QFY09. Jaguar Land Rover also did well to grow sales by 38% YoY. However, the stock of Tata Motors has run up 438% from its lows and at the current price, may not find a lot of buyers.