Persistent selling mars indices

Wed, 7 Jul Closing

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Indian markets languished in the red for the entire trading session today on the back of sustained selling activity across index heavyweights. While the BSE Sensex closed lower by around 143 points (down 1%), the NSE Nifty lost around 48 points (down 1%). Midcap and smallcap stocks were also at the receiving end as both the BSE Midcap and BSE Smallcap closed marginally lower. Losses were largely seen in metals and oil & gas stocks.

As regards global markets, Asian indices closed mixed today while the European indices have opened in the red. The rupee was trading at Rs 47.11 to the dollar at the time of writing.

As per reports Tata Steel reported flat domestic sales in 1QFY11. Sales in the first quarter were hurt by weak market sentiment in the flat products segment and excessive imports of hot rolled coil from China. Sales of long products, mainly used in construction, rose 8%. Tata Steel did not divulge growth for flat products. However, within this segment, demand from the auto sector rose 20%. The company's crude steel production in India rose 8.3% to 1.63 m tonnes for the quarter. It must be noted that in 4QFY10, steel consumption grew 28% QoQ. Demand came in from major steel consuming sectors such as automobiles, machinery and equipment production industries. Infact, in FY10, global steel consumption recovered in the second half of the year after a steep decline in the first half. The stock closed 1% lower.

Barring Glenmark, most pharma stocks closed in the red today. Glenmark had a very challenging FY09 wherein adverse conditions in most markets led to decline in sales. Delay in US FDA approvals for products did not help matters either. However, the scenario improved in FY10 and the company reported a healthy 18% YoY growth in revenues led by the speciality business (India, semi-regulated markets, Europe and Latin America), which grew by 28% YoY. Not just that, the company’s R&D programme had received some setbacks in the past with no out-licensing revenues in FY09. With the environment slightly improving, Glenmark has been able to bag a deal with Medicis Pharmaceuticals of the US.

As per a leading business daily, the total value of merger and acquisition (M&A) deals in the country jumped nine-fold to US$ 24.8 bn in the second quarter of 2010. With this, the total value of M&A deals in the year so far has surged to US$ 48 bn. In stark contrast, the value of deals in 2QCY09 stood at US$ 2.8 bn. There was a marked increase in the number of deals that took place too. For instance, the deal count rose to 182 in 2QCY10 as compared to 98 in the corresponding period the previous year. Given that the Indian economy has been growing at a strong pace, investor confidence and consequently liquidity has returned to the market. However, rise in valuations is an important factor that companies will have to watch out for in the future.