Another weak close for the Sensex

Thu, 28 Jul Closing

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   11:30 am   

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Indian stock market indices once again succumbed to selling pressure and closed in the negative for the day on weak global cues. The BSE-Sensex lost in the region of 223 points today whereas NSE-Nifty edged lower by around 54 points. The smaller indices also did not fare any better, with the BSE Midcap and the BSE Small cap index closing in the region of 1% lower.

Asian indices ended the day on the negative note while Europe is trading in the red currently. The rupee was trading at Rs 44.08 to the dollar at the time of writing.

It looks like RBI's move of hiking interest rates has had some effect. Food inflation in mid-July rose 7.3%, lower than the 7.6% rise recorded in the previous week. This is the lowest level hit for food inflation in the past 20 months. However, fuel inflation climbed up to 12.1% during the period, which came in higher than the 11.9% clocked in the previous week.

Bank of Baroda recently announced its results for the first quarter of the financial year 2012 (1QFY12). The bank reported a net interest income growth of 24% YoY in 1QFY12, on the back of 25% YoY growth in advances. Its other income grew by a marginal 4% YoY in 1QFY12 on account of a fall in treasury income. Despite yields on domestic advances rising, its overall net interest margins (NIMs) were sustained at 2.9% in 1QFY12 on higher cost of funds. The bank's net non-performing assets (NPAs) moved up marginally from 0.39% in 1QFY11 to 0.44% in 1QFY12. Irrespective, the bank's asset quality continues to remain superior to its public sector peers.Net profits were up 20% YoY in 1QFY12; however higher provisions on advances and interest costs ate into the profits. The bank's capital adequacy ratio remained comfortable at 13.1% at the end of the quarter. Overall the bank has seen a sustained performance even in a tough macroeconomic environment.

Greaves Cotton also recently announced its results for the first quarter of the financial year 2012 (1QFY12). Its sales grow by 15.6% YoY during 1QFY12, led by strong performance from both engines and infrastructure equipment divisions. The company's operating profits increased 25% YoY during the quarter and its operating margins expanded to 14% (13% earlier) due to fall in staff cost as a percentage of sales.

Net profits increased 26% YoY during the quarter due to strong performance at the operating level and fall in interest expenses. The company's new auto manufacturing unit at Aurangabad with a production capacity of 80,000 units per annum is also expected to go on stream shortly.