Weakness all across

Tue, 7 Oct Closing

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Selling activity intensified as the day progressed, leading the markets to end the day on quite a weak note. The BSE-Sensex closed lower by about 300 points or 1.1%, while the NSE-Nifty ended lower by about 1.2% or 93 points. Stocks across the board were trading weak with metal and pharmaceutical stocks leading the pack of losers. Mid and smallcap stocks ended the day on a weak note as well, with the BSE Mid Cap and BSE Small Cap indices closing lower by about 0.9% and 0.8% respectively.

Stock markets in other parts of Asia ended the day on a mixed note with Hong Kong ending higher by about 0.5%, while Japan closed lower by 0.7%. European stocks were trading weak at the time of writing. The rupee was trading at Rs 61.36 to the dollar at the time of writing.

Stocks of automobile companies ended the day on a weak note with Hero Motocorp and Mahindra and Mahindra leading the pack of losers. Bajaj Auto announced its sales volumes for the month of September 2014 recently. Total volumes were up to 399,450 units, higher by 9% YoY. Forming about 44% of the total volumes, the company's exports grew by 19% YoY. Further, sales of commercial vehicles, which include sales of three wheelers, rose by 19% YoY.

The stock of Bajaj Auto has gained by 23% in the year till date and is currently trading close to its 52-week high price level. However, when compared to the broader market and the stock of rival company Hero Honda, it has underperformed significantly. Rs 100 invested in Bajaj Auto a year ago would be worth Rs 109 currently, while the same amount invested in the Sensex and Hero Honda would be worth Rs 133 and Rs 141 respectively.

Stocks of pharmaceutical companies ended the day on a weak note led by IPCA Laboratories, Apollo Hospitals and Cipla Limited. The stock of IPCA Laboratories was amongst the top losers today, ending the day lower by about 5%. This is following the news of Health Canada, the Canadian drug regulator imposing an import alert on the company a few days ago. It may be noted that the company had voluntarily stopped exports to the country as a precautionary step. This was done following a review of an inspection report made by the US FDA. It may be noted that the latter had issued 483s as the US regulators had made some negative observations. While this event may not impact revenues significantly, it is a negative development for the company as receiving such a notice from other regulators indicates that the things could be worse than initially anticipated.