After remaining under marginal pressures in the afternoon trading session, the Indian benchmark indices have closed flat for the day. Despite the volatility in the markets for past few days, the undertone remains buoyant on account of positive flows, good earnings season and recovery in rainfall. The sectoral indices have closed on a mixed note with stocks from the realty and capital goods spaces witnessing maximum selling pressures, while FMCG and IT stocks reported major gains for the day. Both the BSE Mid Cap and the BSE Small Cap indices lost steam and were down by 1.7% and 2.4% respectively. The BSE Sensex closed lower by 38 points. The NSE-Nifty too was seen down by 13 points.
On the global front, the Asian indices closed the day on a mixed note. The European indices have witnessed buoyancy and are trading in green. The rupee was trading at Rs 61.27 to the dollar at the time of writing.
Barring few such as KSB Pumps, Alstom T&D, Lakshmi Machine and Altas Copco, all the remaining engineering stocks today have faced maximum selling pressures. Stocks like Engineers India and Welspun Corp massively underperformed and led the pack of losers. The stock of Engineers India plunged 14% today post the poor earnings performance for the first quarter of FY15. Lower sales and higher expenditure dented the profitability of the company. The net sales for the quarter declined by 2% YoY to Rs 4.4 bn. The total expenditure went spiked 15% YoY to Rs 3.9 bn. Consequently, the first quarter profits were down at Rs 800 m as against Rs 1.29 bn for the same quarter a year ago. The contraction was witnessed in segmental performance for both consulting and turnkey project segments. The company has been a victim of poor macroeconomic conditions that have dented the growth of the entire infrastructure sector. However, a stable and reform friendly government is expected to work towards getting rid of the policy bottlenecks; thereby reviving the infrastructure sector. Also, improving economic scenario as a whole shall boost industrial capex and consequently help the order book growth of the company.
As per a leading financial daily, acceleration in consumer price inflation (CPI) in July and weak factory output data of June have dampened the hopes of a faster economic turnaround. This further intensifies the pressures for policymakers to contain prices and revive growth. That the CPI has gone up to 7.96% in July as against 7.46% in June primarily due to higher food and beverage prices is rather worrisome. Factory output data for June that slowed to 3.4% can also give nightmares, primarily because the manufacturing activity has reported a sharp deceleration! While inflation woes remain, the geopolitical risks and monsoon worries are other strong deterrents to the economic growth. The government has already announced slew of measures in the Budget and has also unveiled a slew of anti-inflationary measures. But the measures haven't been as fruitful as expected.