Indian equity markets began the day's proceedings in the red but gained in the subsequent hours as buying activity intensified across index heavyweights. The afternoon session saw the indices break into the positive and in the final trading hour momentum increased ensuring that the indices closed well above the dotted line. While the Sensex today closed higher by 86 points, the NSE-Nifty today closed higher by 27 points. The BSE Mid Cap and the BSE Small Cap notched gains of 0.3% and 0.6% respectively. Barring auto and metals stocks, gains were seen across sectors.
As regards global markets, Asian indices closed mixed today while European indices have opened in the red. The rupee was trading at Rs 55.36 to the dollar at the time of writing.
Cement stocks closed mixed today. While Mangalam Cement and Ambuja Cement found favour, Madras Cements closed in the red. As per a leading business daily, cement manufacturers have slashed cement price by 5% per bag. The drop in cement prices is due to different market dynamics relating to coal, power, transportation, distribution, etc. This is bound to have some impact on the profitability of companies in the sector. It must be noted that the sector is also under pressure as the Competition Commission of India (CCI) has slapped a penalty of nearly Rs 63.1 bn on 11 cement companies that have been found guilty of cartelisation and price manipulation. The companies have been ordered to pay a penalty to the tune of 50% of their average profit during the financial year 2009-10 (FY10) and 2010-11 (FY11).
Auto stocks closed mixed today. While Maruti Suzuki and Tata Motors closed firm, Hero Motocorp and Ashok Leyland were at the receiving end. As per a leading business daily, the Society of Indian Automobile Manufacturers (SIAM) plans to lower the growth projections for FY13 on the back of a lacklustre performance in auto sales in the year till August. Overall passenger vehicle (PV) sales fell by 4% (passenger vehicles includes cars, utility vehicles and vans). This was largely due to the lockout at Maruti's plant at Manesar since the company is a market leader in the PV space. That said, the fall would have been sharper had it not been for the 71% growth seen in diesel-dominated utility vehicles (UV) sales. Commercial vehicle sales rose 4% in August, led by a 13% growth in light CV sales. Sales of heavy CVs continued to be impacted as the economic activity slowed down. Two-wheelers in August recorded negative growth for the first time in over three-and-a-half years. Sales fell 4.5% to 1.05 m units. Indeed, firm interest rates, fuel prices and slowdown in the economic activity has dampened demand and adversely impacted the fortunes of the sector. However, the sector is cyclical and while these are near term headwinds, the long term growth prospects of the sector remain intact.