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Mid and small caps gather steam
Thu, 9 Oct Closing

Snapping the trading losses of last few days, the Indian markets stood buoyant the entire day today. Supported primarily by banking, financials, oil and gas and capital goods, the Indian benchmark indices soared higher during the day. While BSE Sensex surged higher and was up by 391 points, the NSE-Nifty too was seen up by 118 points. While most of the sectoral indices ended in green, the mid and small cap indices too gathered steam. Both the BSE Mid Cap and the BSE Small Cap indices were up by 1.8% and 1.6% respectively. Realty and capital goods' stocks witnessed maximum buying interest.

On the global front, the Asian indices closed the day on a positive note. The European indices too have opened in green today. The rupee was trading at Rs 60.99 to the dollar at the time of writing.

Aluminium stocks have been upbeat today. Both Hindalco and Nalco have closed the day on a promising note.

In one set of news, Hindalco Industries have seen a major upsurge in stock momentum in today's trading session post the robust earnings performance of the US based aluminium major Alcoa Inc for the third quarter of the calendar year. Higher aluminum prices and lower costs drove a recovery in its business unit that produces aluminum for the US major.

On the other hand, Hindalco had witnessed a huge dent in profitability for the quarter ended June 2014. During this quarter, sales growth jumped substantially due to higher volumes driven by a ramp up in production at Mahan smelter. While the Aluminum LME price was lower by 2% YoY, a weaker rupee and higher metal premium cushioned sales. However, profits were impacted by higher interest costs and lower other income on the expected lines. Although Hindalco has expanded its aluminum capacity recently, volatile aluminum prices, sticky costs and delay in commencement of mining from captive blocks may put pressure on its profitability growth going forward.

Barring few such as Prime Securities, Sundaram Finance and few others, all the other Investment and finance company stocks have closed the day on an optimistic note. Power Fin. Corp. and Rural Electrification Corp. have led the pack of gainers for the day.

In another set of news the NBFC major Shriram Transport Finance mentioned that the Central Bank may engage into NBFC licensing soon. In pursuant of banking license, the company has the roadmap in place. Furthermore, the company has also made a strong representation to the RBI with regards to the NPL recognition norm. In its framework for new private banks , the RBI had mentioned that the non-performing asset (NPA) recognition which now is 180 days for NBFC companies should be brought to 90 days. Since Shriram Transport Finance caters primarily to the unbanked or under banked customer base, abiding by the aforesaid guideline would put the company in trouble.

Well, the Reserve Bank of India is expected to announce its new framework for NBFCs end October.

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Mar 22, 2018 (Close)