Led by a decent set of September 2010 quarter results from two heavyweights - L&T and HDFC - Indian markets recovered their entire losses during the final hour of trade. At close, stocks from the oil & gas and IT sectors were leading the gainers' pack. However, FMCG and pharma stocks were the worst hit today. On the broader BSE, almost two stocks lost for every one that closed in the positive.
The BSE Sensex and NSE Nifty closed with gains of around 45 points (0.2%) and 25 points (0.4%) respectively. Midcap and smallcap stocks however bucked the trend, as the BSE Midcap and BSE Smallcap indices closed weaker by around 0.5% and 0.2% respectively. The rupee was trading at 44.28 to the US dollar at the time of writing this.
Auto stocks closed mixed today. While gains were seen in Tata Motors and Hero Honda, selling pressure marked trading in TVS Motor and Ashok Leyland. Gains in the 2-wheeler major Hero Honda was seemingly as a result of reports that three leading US-based private equity firms are looking to acquire a 15-18% stake in the company. These firms are said to be the likes of Carlyle, KKR, and Warburg Pincus. And as reported by a leading business daily, the deal is likely to be as part of a transaction that could see Honda Motors completely exit Hero Honda.
News flows regarding Honda's stake in Hero Honda are making the rounds for some time now. This is despite both the companies having strongly denied the same. We would rather take the management's word, than believe unconfirmed rumors. Sure, the probability of Honda not renewing the agreement (which ends in 2014) is there. But considering the size and long history of the company, the possibility of Honda renewing the agreement (maybe with certain changes in the clauses as some newspapers have reported) is higher.
Stocks of financial companies also closed mixed today. Gains were seen in REC and IDFC. On the other hand, selling pressure marked trading in LIC Housing and HDFC. Selling in the housing finance major HDFC was despite a decent set of numbers reported by the company for the first half ended September 2010. For the period, the company's interest income grew by 2% YoY, led by a 19% YoY growth in advances. Its net interest margin improved to 4% during 1HFY11, from 3.4% in 1HFY10. The institution's net profit grew by 22% YoY mainly due to lower interest expense. Its profit margins improved to 26.3%. Further, its capital adequacy and net NPAs stood at comfortable levels of 14.1% and 0.2% respectively at the end of September.
Engineering stocks also saw a mixed performance today. While gains were seen in Suzlon and L&T, others like Engineers India and Punj Lloyd closed in the red. Suzlon has been one of the key gainers among engineering stocks over the past few days. This is notwithstanding the underperformance it has shown over the past one year, which has been a direct result of the company's financial woes. The news that is seemingly driving the stock currently relates to its Belgian subsidiary Hansen Transmissions looking to sell itself out and has received a few bids from interested parties. But anyways, even this won't be of much to help to Suzlon to tide over its financial troubles that have already taken a mammoth size.