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RBI policy fails to enthuse markets
Tue, 30 Jul Closing

Despite the RBI keeping key rates unchanged in the monetary policy review today, the key indices were weighed down by selling pressure in bluechip stocks. Energy, commodity and engineering stocks made up for most of the losses in today's session. That the RBI revised the GDP growth estimate lower to 5.5% for FY14 also hurt sentiments. While the BSE-Sensex closed lower by 245 points (down 1.2%), the NSE-Nifty lost 77 points. Both the BSE Mid Cap index and the BSE Small Cap index lost about 2% in today's session.

As regards global markets, while Asian indices closed a mixed bag today the European indices have opened lower. The rupee was trading at Rs 60.58 to the dollar at the time of writing.

UltraTech Cement announced the results for the quarter ended June 2013 (1QFY14). On a standalone basis, sales declined by 2.3% YoY during the quarter. Operating profits decline by 18.7% YoY as operating margins decline from 25.4% in 1QFY13 to 21.2% in 1QFY14. The other income increased by 116.5% YoY during the quarter. The depreciation charges and interest expenses increase by 10.5% YoY and 32.6% YoY, respectively. Net profits declined by 13.6% YoY during the quarter; while net margins declined from 15.3% in 1QFY13 to 13.6% in 1QFY14.

Talks between PSU mining major Coal India's (CIL) workers and the government on disinvestment failed today. The government was expecting to mop up Rs 200 bn through 10% disinvestment in CIL. The government has earlier also recommended that CIL usese its cash surplus effectively by paying more dividend or investing in other PSUs. CIL is pen to improve the dividend payout ratio from current level (50%) to effectively utilize the cash. It has, however, clearly stated that it is not in favour of investing its surplus cash in the other PSU companies. Also it will not be able to do a buyback as it will lead to violation in the minimum shareholding limit for listing. The company expects to sell 46-48 m tonne of e-auction coal in FY14. But the key concern part is the declining e-auction premium which has currently reduced to 35-36% as against the 39-40% achieved in FY13. The company does not expect to import coal in FY14 for fulfillment of its fuel supply agreements.

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