Volatility hits Indian indices

Fri, 19 Jul Closing

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Indian equity markets had a volatile trading session today. Although the indices began the day's proceedings on a firm note, alternate bouts of buying and selling restricted them within a range. In the final hour, the indices managed to barely close above the dotted line. While the BSE-Sensex today closed higher by 21 points, the NSE-Nifty closed lower by 9 points. The BSE Mid Cap and the BSE Small Cap index lost 0.5% each. Gains were largely seen in IT stocks, while banking stocks were at the receiving end. The stock of BCL closed marginally higher today.

As regards global markets, Asian indices closed mixed today while most European indices have opened in the red. The rupee was trading at Rs 59.64 to the dollar at the time of writing.

Auto stocks closed mixed today. While Bajaj Auto and Hero Motocorp led the pack of gainers, Ashok Leyland and Tube Investments closed into the red. Bajaj Auto announced results for the first quarter ended June 2013. The company reported a mere 1% YoY growth in total revenues for the quarter on account of the persistently sluggish conditions in the domestic auto industry. However, a weaker rupee helped the company especially in terms of relatively better profitability. Net profits were up 2.7% during the quarter. As far as exports are concerned, while revenue growth in dollar terms was flat, in rupee terms sales were up 10% YoY. The company managed to maintain its market share in exports. As reported in a leading business daily, the company expects the depreciating rupee to further benefit it in the coming quarters.

SKB Roop Commercial LLP, a part of the promoter group of Bajaj Corp Ltd (BCL), wants to offload 9.8% stake in the equity share capital of the company. Accordingly, an offer for sale for 14.4 m shares of the face value of Re 1 each has been announced by the company. Presently, the promoter shareholding stands at 84.8%. The sale would also make the company compliant with the 25% public shareholding norm of SEBI. BCL is a leading producer of hair oil. It is part of the Shishir Bajaj Group of companies and subsidiary of Bajaj Consumer Care Limited (BCCL). It is also the market leader with a 55% share in the rapidly growing Light Hair Oil (LHO) segment through its Almond Drops Hair Oil (ADHO). Due to the strong leadership position and pricing power enjoyed in a premium category, the company's operating margin is more than two times that earned by closest rival, Marico. Additionally, the company's interest cost is low due to almost zero dependence on borrowed funds. BCL also enjoys a low tax rate as all its plants are located in tax-free states.